[Federal Register Volume 77, Number 51 (Thursday, March 15, 2012)]
[Notices]
[Pages 15405-15407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6235]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66557; File No. SR-EDGA-2012-06]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGA Rule 11.9

March 9, 2012.
    Pursuant to Section 19(b)(2) [sic] of the Securities Exchange Act 
of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on February 24, 2012, the EDGA Exchange, Inc. (the 
``Exchange'' or the ``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 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

    The Exchange proposes to introduce an additional routing option to 
Rule 11.9 to provide Users \3\ with increased access to multiple 
sources of liquidity and greater flexibility in routing orders. 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\ As defined in Rule 1.5(cc)[sic].
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange's current list of routing options are codified in Rule 
11.9(b)(3). In this filing, the Exchange proposes to amend Rule 
11.9(b)(3) to add an additional routing strategy. In connection with 
the introduction of the subject routing strategy, the Exchange also 
proposes to amend Rule 11.5(c)(7) so that the definition of a Mid-Point 
Peg Order is consistent with the functionality of this new routing 
strategy.
    In particular, the Exchange proposes to add the RMPT routing 
strategy in Rule 11.9(b)(3)(t) to allow an order to access additional 
sources of liquidity. RMPT is a routing option under which a Mid-Point 
Peg Order \4\ checks the System for available shares and any shares 
that remain unexecuted are then sent sequentially to destinations on 
the System routing table that support midpoint eligible orders. This 
allows orders sent through the RMPT strategy to interact with such 
midpoint eligible orders. If any shares remain unexecuted after 
routing, they are posted on the EDGA book as a Mid-Point Peg Order, 
unless otherwise instructed by the User.
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    \4\ As defined in Rule 11.5(c)(7).
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    Consequently, the Exchange also seeks to amend the definition of a 
Mid-Point Peg Order to allow for order routing pursuant to the RMPT 
routing strategy. Rule 11.5(c)(7) currently states that ``Mid-Point Peg 
Orders are not eligible for routing pursuant to Rule 11.9(b)(2) and are 
not displayed on the Exchange''. The Exchange proposes to carve out an 
exception to allow Users to elect to route the Mid-Point Peg Order 
pursuant to the RMPT routing strategy, as defined in Rule 
11.9(b)(3)(t), to account for this new routing option. This revised 
definition allows for greater clarity and consistency between the 
behavior of the Exchange's order types and routing options, resulting 
in increased transparency for the User.
    The Exchange believes that the proposed introduction of the routing 
option described above will provide Users with increased access to 
multiple sources of liquidity and greater flexibility in routing orders 
without having to develop their own complicated routing strategies.

[[Page 15406]]

    The Exchange will notify its Members in an information circular of 
the exact implementation date of this rule change, which will be no 
later than May 31, 2012.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act,\5\ 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 the proposed introduction 
of the routing option described above will provide Users with increased 
access to multiple sources of liquidity and greater flexibility in 
routing orders without having to develop their own complicated routing 
strategies. As such, the User benefits from more options, potentially 
improved execution prices at midpoint prices, and a more efficient 
marketplace. In addition, the Exchange believes that the proposed rule 
change is designed to promote just and equitable principles of trade 
and protect investors and the public interest in that it promotes 
transparency to investors through the codification of the addition of 
the new routing strategy and its amendment to an existing order type, 
the Mid-Point Peg Order, in the Exchange's rulebook.
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    \5\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \6\ of the Act and Rule 19b-4(f)(6) \7\ thereunder. The 
proposed rule change effects a change that (A) does not significantly 
affect the protection of investors or the public interest; (B) does not 
impose any significant burden on competition; and (C) by its terms, 
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; provided that the 
self-regulatory organization has given 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
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    The Exchange provided the Commission with 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.\8\
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    \8\ 17 CFR 240.19b-4(f)(6)(iii).
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    The rule change is designed to provide market participants with a 
wider variety of options when availing themselves of EDGA's order 
routing and execution services. By offering additional routing options, 
EDGA hopes to benefit market participants and their customers by 
allowing them greater flexibility in their efforts to fill orders and 
minimize trading costs. EDGA provides these services in a highly 
competitive market in which participants may avail themselves of a wide 
variety of routing options offered by self-regulatory organizations, 
alternative trading systems, other broker-dealers, market participants' 
own proprietary routing systems, and service bureaus. In such an 
environment, the changes proposed in this rule filing do not burden 
competition, because the Exchange can only succeed in attracting order 
flow if it offers investors higher quality and better value than 
services offered by others. Encouraging competitors to provide higher 
quality and better value is the essence of a well-functioning 
marketplace.
    Furthermore, the Exchange believes that this rule filing is non-
controversial because it codifies the use of a voluntary routing 
strategy that is offered to all Members equally. In addition, the 
potential midpoint executions are widely available through analogous 
order types on other exchanges \9\ and result in more efficient, 
improved executions for potential investors.
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    \9\ See BATS Rule 11.9(c)(9) (``Mid-Point Peg Orders''); see 
also, NASDAQ Rule 4751(f)(4) (``Midpoint Peg'' orders); NYSE Arca 
Equities Rule 7.31(h)(5) (``Mid-Point Passive Liquidity Orders''); 
EDGX Rule 11.5(c)(7) (``Mid-Point Match Orders'').
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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-EDGA-2012-06 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-2012-06. 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

[[Page 15407]]

available publicly. All submissions should refer to File Number SR-
EDGA-2012-06 and should be submitted on or before April 5, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6235 Filed 3-14-12; 8:45 am]
BILLING CODE 8011-01-P