[Federal Register Volume 77, Number 15 (Tuesday, January 24, 2012)]
[Notices]
[Pages 3541-3542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1286]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66176; File No. SR-EDGX-2012-03]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Amend 
EDGX Rule 1.5(q)

 January 18, 2012.
    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 13, 2012, the EDGX Exchange, Inc. (the ``Exchange'' or 
the ``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which items have been prepared by the self-regulatory 
organization. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    EDGX Exchange, Inc. (``EDGX'' or the ``Exchange''), proposes to 
amend EDGX Rule 1.5(q) to change the starting time of the Pre-Opening 
Session from 7 a.m. Eastern Time (``ET'') to 8 a.m. ET. The Exchange 
proposes to make a conforming amendment to Rule 14.1(c)(2) to change 
the reference for the starting time of the Pre-Opening Session from 7 
a.m. ET to 8 a.m. ET. Through this filing, the Exchange proposes to 
amend the rule text from SR-EDGX-2011-27,\3\ which proposed to change 
the Pre-Opening Session starting time to 7 a.m. ET. The text of the 
proposed rule change is attached as Exhibit 5 and is available on the 
Exchange's Web site at www.directedge.com, at the Exchange's principal 
office, and at the Public Reference Room of the Commission.
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    \3\ See Securities Exchange Act Release No. 65197 (August 25, 
2011), 76 FR 54281 (August 31, 2011) (SR-EDGX-2011-27). For the 
purposes of this filing, the Exchange will refer to SR-EDGX-2011-27 
as the ``August 25 Rule Filing.'' Given that the August 25 Rule 
Filing was immediately effective but not operative, the Exchange 
proposes to amend its rule text in this filing.
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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 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 filed a rule change to amend EDGX Rule 1.5(q) to 
change the starting time of the Pre-Opening Session from 8 a.m. ET to 7 
a.m. ET.\4\ This change would have allowed the Exchange to compete with 
other exchanges that open their markets for entry of orders prior to 8 
a.m. ET.\5\ The Exchange proposes to amend the rule text of its August 
25 Rule Filing at this time in order to accommodate Members who 
initially expressed an interest in the change in Pre-Opening Session 
time to begin at 7 a.m. ET; but, after further consideration, Members 
confirmed that they were no longer interested because the additional 
costs and resources needed to open earlier outweighed any incidental 
benefits from increased trading activity that they would incur. As 
such, based on the Exchange's feedback from Members it surveyed in 
September 2011, the Exchange confirmed that no Members adversely relied 
upon the August 25 Rule Filing.
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    \4\ Id. The Exchange initially proposed to expand its 
operational hours to open the System earlier so that Members could 
enter and execute orders beginning at 7 a.m. ET rather than 8 a.m. 
ET.
    \5\ See The NASDAQ Stock Market LLC Rule 4617 (opens at 7 a.m. 
EST). See also NASDAQ OMX BX Rule 4617 (opens at 7 a.m. EST); NYSE 
Arca Equities Rule 7.34 (opens at 1 a.m. Pacific Time).
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    At this time, the Exchange has not implemented the 7 a.m. ET 
starting time for the Pre-Opening Session because it has not notified 
its Members pursuant to the language in the August 25 Rule Filing.\6\ 
In addition, the Exchange notes Members are not adversely impacted by 
the amendment to the rule text of the August 25 Rule Filing as no 
Members were required to incur any costs or make any changes to their 
systems to comply with the earlier Pre-Opening time if they were not 
planning to trade beginning at 7 a.m. ET.
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    \6\ See Securities Exchange Act Release No. 65197 (August 25, 
2011), 76 FR 54281 (August 31, 2011) (SR-EDGX-2011-27), stating the 
Exchange will provide notice to Members in an information circular 
when the proposed rule change will be effective, which will be no 
later than January 1, 2012.

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[[Page 3542]]

    Based on the foregoing, the Exchange proposes to amend Rule 1.5(q) 
and make a conforming amendment to Rule 14.1(c)(2) to change the 
starting time of the Pre-Opening Session from 7 a.m. ET back to 8 a.m. 
ET as it appeared before the August 25 Rule Filing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b)(5) of the Act,\7\ in that the 
proposal is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in, securities, 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 amending its rule text from the August 25 
Rule Filing will afford the Exchange additional time to evaluate the 
potential benefits of an earlier starting time for the Pre-Opening 
Session. In addition, the Exchange believes that it is not 
discriminating against its Members given that the Exchange contacted 
Members to discuss amending the text of the August 25 Rule Filing, and 
the Exchange confirmed that no Members had adjusted their 
infrastructure or incurred any costs in reliance on the August 25 Rule 
Filing.
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    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not 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 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\10\ 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay. The Exchange notes that 
waiver of this requirement will permit the Exchange to immediately 
remove language from its rules that could otherwise create confusion 
for Members because the 7 a.m. ET start time has not been 
implemented.\12\ The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver would allow the Exchange to avoid 
confusion among its Members and would immediately provide certainty 
with respect to the Exchange's rules regarding the start time for the 
Pre-Opening Session. For this reason, the Commission designates the 
proposed rule change to be operative upon filing with the 
Commission.\13\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
    \11\ Id.
    \12\ See Securities Exchange Act Release No. 65197 (August 25, 
2011), 76 FR 54281 (August 31, 2011) (SR-EDGX-2011-27), stating the 
Exchange will provide notice to Members in an information circular 
when the proposed rule change will be effective, which will be no 
later than January 1, 2012.
    \13\ For the 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).
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    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 email to [email protected]. Please include 
File Number SR-EDGX-2012-03 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-EDGX-2012-03. 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 
a.m. and 3 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-EDGX-2012-03 and should be 
submitted on or before February 14, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1286 Filed 1-23-12; 8:45 am]
BILLING CODE 8011-01-P