[Federal Register Volume 77, Number 219 (Tuesday, November 13, 2012)]
[Notices]
[Pages 67699-67701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27493]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68168; File No. SR-EDGA-2012-46]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Amendments to the EDGA Exchange, Inc. Fee Schedule

November 6, 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 November 1, 2012, 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 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 amend its fees and rebates applicable to 
Members \3\ of the Exchange pursuant to EDGA Rule 15.1(a) and (c). All 
of the changes described herein are applicable to EDGA Members. The 
text of the proposed rule change is available on the Exchange's 
Internet 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 Exchange Rule 1.5(n).
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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 self-regulatory organization 
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
    In Footnote 8 of the fee schedule that is appended to Flag SW., the 
Exchange proposes to assess a fee of $0.0025 per share in lieu of the 
current fee of $0.0023 per share for Members' orders that are routed 
using the SWPA, SWPB or SWPC routing strategies \4\ and remove 
liquidity from the New York Stock Exchange (``NYSE''), yielding Flag D. 
This proposed change represents a pass-through of the rate that Direct 
Edge ECN LLC d/b/a DE Route (``DE Route''), the Exchange's affiliated 
routing broker dealer, is charged for routing orders to NYSE, in 
response to the pricing changes in NYSE's filing with the Securities 
and Exchange Commission (``SEC'').\5\ Accordingly, the Exchange 
proposes to delete the reference to the fee of $0.0023 per share in 
Footnote 8 because the rate for Flag D is $0.0025 per share. Therefore, 
the Exchange will assess a charge of $0.0025 for Members' orders that 
are routed using the SWPA, SWPB or SWPC routing strategies and remove 
liquidity from NYSE, yielding Flag D.
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    \4\ As defined in Exchange Rules 11.9(b)(3)(o), (p) and (q).
    \5\ See Securities Exchange Release No. 68021 (October 9, 2012), 
77 FR 63406 (October 16, 2012) (SR-NYSE-2012-50).
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    In Footnote 3 of the fee schedule that is appended to Flags C, D, 
J, L and 2, the Exchange proposes to assess a fee of 0.30% of the 
dollar value of the transaction in lieu of the current fee of $0.0023 
per share for stocks priced below $1.00 that are routed or re-routed to 
NYSE and remove liquidity, yielding Flag D.\6\ This proposed change now 
represents a pass-through of the rate that DE Route is charged for 
routing orders to NYSE that remove liquidity.\7\
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    \6\ The Exchange does not propose to amend the rates for stocks 
priced below $1.00 that are routed to Nasdaq OMX BX (``BX'') or 
NASDAQ, yielding Flags C, J, L and 2, as described in Footnote 3 of 
the fee schedule.
    \7\ Prior to March 1, 2012, the NYSE Price List generally 
specified that the applicable rate was the lesser of (i) 0.30% of 
the total dollar value of the transaction and (ii) $0.0023 per 
share. See Securities Exchange Act Release No. 66600, (March 14, 
2012), 77 FR 16298 (March 20, 2012) (SR-NYSE-2012-07). Effective 
March 1, 2012, the rate for these transactions with a per-share 
price of less than $1.00 is now 0.3% of the total dollar value of 
the transaction.

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[[Page 67700]]

    On Flag RS, the Exchange proposes to offer a rebate of $0.0026 per 
share \8\ in lieu of the current rebate of $0.0016 per share for orders 
that are routed to the Nasdaq OMX PSX (``PSX'') and add liquidity. This 
proposed change represents a pass-through of the rebate that DE Route 
receives for routing orders to PSX, in response to recent pricing 
changes in PSX's filing with the SEC.\9\
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    \8\ The Exchange notes that it is passing through the standard 
rebate of $0.0026 per share even though it possibly can achieve a 
tiered rebate of $0.0028 per share if it meets certain criteria.
    \9\ See Securities Exchange Release No. 68052 (October 12, 
2012), 77 FR 64170 (October 18, 2012) (SR-PHLX-2012-119).
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    Currently, the Exchange charges Members a rate of $0.0027 per share 
for orders that are routed to PSX using the ROUC or ROUE routing 
strategies,\10\ yielding Flag K. The Exchange proposes to increase the 
rate to $0.0028 per share for orders that yield Flag K in response to 
recent pricing changes in PSX's filing with the SEC.\11\
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    \10\ As defined in Exchange Rules 11.9(b)(3)(a) and (c).
    \11\ See Securities Exchange Release No. 68052 (October 12, 
2012), 77 FR 64170 (October
    18, 2012) (SR-PHLX-2012-119).
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    The Exchange proposes adding the title ``EdgeBook Depth Fees'' to 
the fee schedule describing the fees for the EdgeBook Depth A to 
increase the transparency of the fee schedule for Members.
    The Exchange proposes to implement these amendments to its fee 
schedule on November 1, 2012.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ in particular, as the 
proposed rule changes are designed to provide for the equitable 
allocation of reasonable dues, fees and other charges among the 
Exchange's Members and other persons using its facilities.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The proposed rate change in Footnote 8 associated with routing 
orders to NYSE through DE Route on the Exchange's fee schedule is a 
pass-through rate from DE Route to the Exchange and from the Exchange, 
in turn, to its Members. The Exchange's proposal represents an 
equitable allocation of reasonable dues, fees, and other charges among 
Members of the Exchange and other persons using its facilities because 
the Exchange does not levy additional fees or offer additional rebates 
for orders that it routes to NYSE through DE Route. The Exchange notes 
that routing through DE Route is voluntary. Currently, in Footnote 8, 
for orders yielding Flag D that use the SWPA, SWPB, or SWPC routing 
strategies and remove liquidity from NYSE, NYSE charged DE Route a fee 
of $0.0023 per share, which, in turn, was passed through to the 
Exchange. The Exchange, in turn, charged its Members a fee of $0.0023 
per share as a pass-through. On October 1, 2012, NYSE increased the 
rate it charges its customers, such as DE Route, from $0.0023 per share 
to a charge of $0.0025 per share for orders that are routed or re-
routed to NYSE and remove liquidity. Therefore, the Exchange believes 
that the proposed change in Footnote 8 from a fee of $0.0023 per share 
to a fee of $0.0025 per share is equitable and reasonable because it 
accounts for the pricing changes on NYSE. In addition, the proposal 
allows the Exchange to continue to charge its Members a pass-through 
rate for orders that are routed or re-routed to NYSE and remove 
liquidity using DE Route. Lastly, the Exchange also believes that the 
proposed amendment is non-discriminatory because it applies uniformly 
to all Members.
    The proposed rate change in Footnote 3 associated with routing 
orders to NYSE through DE Route now represents a pass-through rate from 
DE Route to the Exchange and from the Exchange, in turn, to its 
Members. The Exchange's proposal represents an equitable allocation of 
reasonable dues, fees, and other charges among Members of the Exchange 
and other persons using its facilities because the Exchange does not 
levy additional fees or offer additional rebates for orders that it 
routes to NYSE through DE Route. The Exchange notes that routing 
through DE Route is voluntary. For stocks priced below $1.00 that are 
routed or re-routed to NYSE and remove liquidity, DE Route charged its 
Members a fee of $0.0023 per share.\14\ NYSE modified the rate it 
charged its customers, such as DE Route, effective March 2012, to a 
charge of 0.30% of the dollar value of the transaction \15\ for stocks 
priced below $1.00 that remove liquidity. Therefore, the Exchange 
believes that the proposed change in Footnote 3 from a fee of $0.0023 
per share to a fee of 0.30% of the dollar value of the transaction is 
equitable and reasonable because it allows the Exchange to now charge 
its Members a pass-through rate for orders that are routed or re-routed 
to NYSE and remove liquidity using DE Route. Lastly, the Exchange also 
believes that the proposed amendment is non-discriminatory because it 
applies uniformly to all Members.
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    \14\ Prior to March 1, 2012, the NYSE Price List generally 
specified that the applicable rate was the lesser of (i) 0.30% of 
the total dollar value of the transaction and (ii) $0.0023 per 
share. See Securities Exchange Act Release No. 66600, (March 14, 
2012), 77 FR 16298 (March 20, 2012) (SR-NYSE-2012-07). Effective 
March 1, 2012, the rate for these transactions with a per-share 
price of less than $1.00 is now 0.3% of the total dollar value of 
the transaction.
    \15\ Id.
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    The proposed rate change for Flag RS associated with routing orders 
to PSX through DE Route on the Exchange's fee schedule is a pass-
through rate from DE Route to the Exchange and from the Exchange, in 
turn, to its Members. The Exchange's proposal represents an equitable 
allocation of reasonable dues, fees, and other charges among Members of 
the Exchange and other persons using its facilities because the 
Exchange does not levy additional fees or offer additional rebates for 
orders that it routes to PSX through DE Route. The Exchange notes that 
routing through DE Route is voluntary. Currently, for orders yielding 
Flag RS, PSX offers DE Route a rebate of $0.0016 per share, which, in 
turn, is passed through to the Exchange. The Exchange, in turn, offers 
its Members a rebate of $0.0016 per share as a pass-through. On October 
1, 2012, PSX increased the rebate it offers its customers, such as DE 
Route, from $0.0016 per share to a rebate of $0.0026 per share\16\ for 
orders that are routed to PSX and add liquidity. Therefore, the 
Exchange believes that the proposed change for Flag RS from a rebate of 
$0.0016 per share to a rebate of $0.0026 per share is equitable and 
reasonable because it accounts for the pricing changes on PSX. In 
addition, the proposal allows the Exchange to continue to charge its 
Members a pass-through of the standard rebate\17\ for orders that are 
routed to PSX and add liquidity using DE Route. Lastly, the Exchange 
also believes that the proposed amendment is non-discriminatory because 
it applies uniformly to all Members.
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    \16\ The Exchange notes that it is passing through the standard 
rebate of $0.0026 per share even though it possibly can achieve a 
tiered rebate of $0.0028 per share if it meets certain criteria.
    \17\ Id.
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    The Exchange believes that its proposal to amend the rate for Flag 
K represents an equitable allocation of reasonable dues, fees and other 
charges among its Members and other persons using its facilities. DE 
Route is charged either a fee of $0.0028 per share or $0.0030 per share 
depending on the routing strategy employed.\18\ Because

[[Page 67701]]

the Exchange does not distinguish between ROUC and ROUE when yielding 
Flag K, the Exchange proposes to assess a charge of $0.0028 per share 
for Members orders that are routed to PSX using either ROUC or ROUE, 
which represents the more favorable of the two rates for its Members. 
The Exchange's proposal to offer its Members the more favorable of two 
rates is also equitable because it is similar to the rates associated 
with Flag C, where the Exchange offers Members the more favorable 
rebate of $0.0014 per share for orders routed to BX that remove 
liquidity regardless of whether the Member achieves the tiered volume 
necessary to exceed the default rebate of $0.0005 per share.\19\ In 
addition, the rate of $0.0028 per share for Flag K is also reasonable 
because it is similar to the rates charged by PSX for orders routed to 
its exchange, where PSX assesses charges between $0.0028 per share and 
$0.0030 per share depending on the routing strategy employed.\20\ 
Lastly, the Exchange also believes that the proposed amendment is non-
discriminatory because it applies uniformly to all Members.
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    \18\ See NASDAQ OMX PSX, Price List--Trading and Connectivity, 
http://www.nasdaqtrader.com/Trader.aspx?id=PSX_pricing.
    \19\ See Securities Exchange Release No. 67980 (October 4, 
2012), 77 FR 61800 (October
    11, 2012) (SR-EDGA-2012-45).
    \20\ See NASDAQ OMX PSX, Price List--Trading and Connectivity, 
http://www.nasdaqtrader.com/Trader.aspx?id=PSX_pricing.
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    The Exchange's proposal to add the title ``EdgeBook Depth Fees'' to 
the fee schedule increases transparency on the fee schedule for Members 
and does not represent any change in EdgeBook Depth fees.
    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.

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) of the Act \21\ and Rule 19b-4(f)(2) \22\ thereunder. At 
any time within 60 days of the filing of such 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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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 19b-4(f)(2).
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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-2012-46 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-2012-46. 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 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-2012-46 and should be 
submitted on or before December 4, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27493 Filed 11-9-12; 8:45 am]
BILLING CODE 8011-01-P