[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40781-40782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16226]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69899; File No. SR-EDGX-2013-24]


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

July 1, 2013.
    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 June 26, 2013, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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.
---------------------------------------------------------------------------

    \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 its fees and rebates applicable to 
Members \3\ and non-Members of the Exchange pursuant to EDGX Rule 
15.1(a) and (c). All of the changes described herein are applicable to 
EDGX 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.
---------------------------------------------------------------------------

    \3\ A Member is any registered broker or dealer, or any person 
associated with a registered broker or dealer that has been admitted 
to membership in the Exchange.
---------------------------------------------------------------------------

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
    The Exchange maintains logical ports for order entry (FIX, HP-API), 
drop copies (DROP), EdgeRisk and market data (collectively, ``Direct 
Logical Ports'').\4\ In SR-EDGX-2012-36, the Exchange reduced the 
number of free Direct Logical Ports from ten (10) sessions to five (5) 
sessions.\5\ The Exchange proposes to reduce the quantity of free 
Direct Logical Ports from five (5) sessions to two (2) sessions. The 
Exchange would assess a monthly fee per logical port for Members and 
non-Members that maintain three or more Direct Logical Ports. In 
addition, the Exchange, pursuant to an information circular dated June 
4, 2013, communicated to Members and non-Members that the Exchange 
would propose these changes in a subsequent filing with the Securities 
and Exchange Commission.\6\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 69670 (May 30, 2013) 
78 FR 33871 (June 5, 2013) (SR-EDGX-2013-18) (adding EdgeRisk ports 
to the list of logical ports offered by the Exchange); Securities 
and Exchange Act Release No. 64963 (July 26, 2011), 76 FR 45895 
(August 1, 2011) (SR-EDGX-2011-21) (discussing the Exchange's 
proposal to include logical ports that receive market data among the 
types of logical ports that the Exchange assesses a monthly fee to 
Members and non-Members).
    \5\ See Securities and Exchange Act Release No. 67741 (August 
28, 2012), 77 FR 53950 (September 4, 2012) (SR-EDGX-2012-36) 
(discussing the Exchange's proposal to reduce its number of free 
logical ports from ten (10) to five (5)).
    \6\ See Direct Edge Trading Notice 13-23: Logical Port 
Fee Changes Effective July 1, 2013, http://www.directedge.com/About/Announcements/ViewNewsletterDetail.aspx?NewsletterID=1010.
---------------------------------------------------------------------------

    The Exchange further proposes to make a ministerial change to its 
fee schedule by changing the name of its HP-API logical ports from 
``HP-API'' to ``Edge XPRS (HP-API).''
    The Exchange proposes to implement these amendments to its fee 
schedule on July 1, 2013.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\7\ in general, and 
furthers the objectives of Section 6(b)(4),\8\ in particular, as the 
proposed rule changes are designed to provide for the equitable 
allocation of reasonable dues, fees and other charges among Members and 
other persons using the Exchange's facilities.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes its proposal to amend its fee schedule to 
reduce the quantity of free Direct Logical Ports from five sessions to 
two sessions represents an equitable allocation of reasonable dues, 
fees and other charges because the Exchange has recently implemented 
several infrastructure enhancements that optimized processing speed and 
capacity per port, thereby requiring fewer ports to communicate the 
same information. In addition, the proposal to reduce the number of 
logical ports from five to two will offset the costs of necessary 
hardware, infrastructure expenses, maintenance fees and staff support 
costs in operating a national securities exchange. The revenue 
generated from its proposal will also pay for the technical 
infrastructure and operating expenses of logical ports along with 
administrative and infrastructure costs associated with allowing 
Members and non-Members to establish logical ports to connect to the 
Exchange's systems. The Exchange also believes that reducing the 
quantity of free Direct Logical Ports from five to two sessions

[[Page 40782]]

will promote efficient use of the ports by market participants, not 
only helping the Exchange to continue to maintain and improve its 
infrastructure, market technology, and services, but also encourage 
Members and non-Members to request and enable only the ports that are 
necessary for their operations related to the Exchange.
    The Exchange believes that it is reasonable to reduce the number of 
free logical ports available to Members and non-Members because such 
practice is consistent with that of other exchanges, such as BATS 
Exchange, Inc., BATS Y-Exchange, Inc. and the NASDAQ Stock Exchange 
LLC.\9\ Additionally, Members and non-Members may opt to disfavor the 
Exchange's pricing if they believe that alternative venues offer them 
better value. Accordingly, if the Exchange were to charge excessive 
fees, the Exchange would stand to lose not only connectivity revenues 
but also revenues associated with the execution of orders routed to it, 
and, to the extent applicable, market data revenues. The Exchange 
believes that this competitive dynamic imposes powerful restraints on 
the ability of any exchange to charge unreasonable fees for 
connectivity.
---------------------------------------------------------------------------

    \9\ See BATS, BATS BZX & BYX Exchange Fee Schedules, http://batstrading.com/FeeSchedule/(charging a monthly fee of $400 per 
logical port other than a Multicast PITCH Spin Server Port or GRP 
Port). See also NASDAQ, Price List-Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 (charging a 
monthly fee of $500 per logical port pair for FIX/OUCH/RASHPort/DROP 
connectivity to NY-Metro and Mid-Atlantic Datacenters).
---------------------------------------------------------------------------

    Lastly, the Exchange believes that the proposed reduction in 
quantity of free ports is non-discriminatory because it applies 
uniformly to Members and non-Members.

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

    The Exchange believes that 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. The Exchange does not believe 
that the proposed amendment to its fee schedule represents a 
significant departure from previous Exchange fees or such fees offered 
by the Exchange's competitors.\10\ Accordingly, the Exchange believes 
that reducing the quantity of free Direct Logical Ports from five 
sessions to two sessions would allow the Exchange to remain competitive 
with other market centers and thus would not burden intermarket 
competition.
---------------------------------------------------------------------------

    \10\ See BATS, BATS BZX & BYX Exchange Fee Schedules, http://batstrading.com/FeeSchedule/(charging a monthly fee of $400 per 
logical port other than a Multicast PITCH Spin Server Port or GRP 
Port). See also NASDAQ, Price List-Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 (charging a 
monthly fee of $500 per logical port pair for FIX/OUCH/RASHPort/DROP 
connectivity to NY-Metro and Mid-Atlantic Datacenters).
---------------------------------------------------------------------------

    The Exchange believes its proposal would not burden intramarket 
competition because the proposed rule change would apply uniformly to 
all Members and non-Members.

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 \11\ and Rule 19b-4(f)(2) \12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2013-24 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-2013-24. 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-EDGX-2013-24 and should be 
submitted on or before July 29, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16226 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P