[Federal Register Volume 78, Number 181 (Wednesday, September 18, 2013)]
[Notices]
[Pages 57425-57427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22651]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70384; File No. SR-EDGX-2013-34]


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

September 12, 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 September 3, 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.
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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 EDGX Rule 15.1(a) and (c) 
(``Fee Schedule'') to: (i) decrease the rebate for orders yielding Flag 
A; and (ii) increase the rebate for orders yielding Flag 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.
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    \3\ ``Member'' is defined as ``any registered broker or dealer, 
or any person associated with a registered broker or dealer, that 
has been admitted to membership in the Exchange. A Member will have 
the status of a ``Member'' of the Exchange as that term is defined 
in Section 3(a)(3) of the Act.'' See 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

[[Page 57426]]

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 proposes to amend its Fee Schedule to: (i) decrease 
the rebate for orders yielding Flag A; and (ii) increase the rebate for 
orders yielding Flag C.
Flag A
    In securities priced at or above $1.00, the Exchange currently 
provides a rebate of $0.0020 per share for Members' orders that yield 
Flag A, which routes to the NASDAQ Stock Market LLC (``Nasdaq'') and 
adds liquidity. The Exchange proposes to amend its Fee Schedule to 
decrease this rebate to $0.0015 per share for Members' orders that 
yield Flag A. The 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 rebated for routing 
orders in Tape C securities to Nasdaq when it does not qualify for a 
volume tiered rebate. When DE Route routes to Nasdaq, it is rebated a 
standard rate of $0.0015 per share for Tape C securities.\4\ DE Route 
will pass through this rate on Nasdaq to the Exchange and the Exchange, 
in turn, will pass through this rate to its Members. The Exchange notes 
that the proposed change is in response to Nasdaq's September 2013 fee 
change where Nasdaq decreased the rebate it provides its customers, 
such as DE Route, from a rebate of $0.0020 per share to a rebate of 
$0.0015 per share for orders in Tape C securities that are routed to 
Nasdaq.\5\
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    \4\ The Exchange notes that to the extent DE Route does or does 
not achieve any volume tiered discount on Nasdaq, its rate for Flag 
A will not change. The Exchange further notes that, due to billing 
system limitations that do not allow for separate rates by tape, it 
will pass through the lesser rebate of $0.0015 per share for all 
Tapes A, B & C securities.
    \5\ See Nasdaq, Price List--Trading Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2#rebates 
(offering a standard, non-tiered rebate of $0.0015 per share for 
Tape C Securities). See also File No. SR-NASDAQ-2013-114.
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Flag C
    In securities priced at or above $1.00, the Exchange currently 
provides a rebate of $0.0004 per share for Members' orders that yield 
Flag C, which routes to Nasdaq OMX BX, Inc. (``BX''). The Exchange 
proposes to amend its Fee Schedule to increase this rebate to $0.0011 
per share for Members' orders that yield Flag C. The proposed change 
represents a pass through of the rate that DE Route is rebated when it 
achieves a volume tiered rebate on BX by routing orders to BX. When DE 
Route routes to BX, it is rebated a volume tiered rate of $0.0011 per 
share.\6\ DE Route will pass through this rate on BX to the Exchange 
and the Exchange, in turn, will pass through this rate to its Members. 
The Exchange notes that the proposed change is in response to BX's 
September 2013 fee change where BX increased its rebate to $0.0011 per 
share for orders that are routed to BX.\7\
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    \6\ The Exchange notes that to the extent DE Route does or does 
not achieve any volume tiered increased rebate on BX, its rate for 
Flag C will not change.
    \7\ See BX, BX Pricing List--Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing (offering a rebate 
to remove liquidity of $0.0011 per share for MPIDs that add an 
average of 25,000 but less than 1 million shares per day). See also 
File No. SR-BX-2013-051.
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Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule on September 3, 2013.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(4),\9\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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Flag A
    The Exchange believes that its proposal to decrease the pass 
through rebate for Members' orders that yield Flag A from $0.0020 to 
$0.0015 per share represents an equitable allocation of reasonable 
dues, fees, and other charges among Members and other persons using its 
facilities because the Exchange does not levy additional fees or offer 
additional rebates for orders that it routes to Nasdaq through DE 
Route. Prior to Nasdaq's September 2013 fee change, Nasdaq provided DE 
Route a rebate of $0.0020 per share for orders in all tapes yielding 
Flag A, which DE Route passed through to the Exchange and the Exchange 
passed through to its Members. In September 2013, Nasdaq decreased the 
standard rebate it provides its customers, such as DE Route, from a 
rebate of $0.0020 per share to a rebate of $0.0015 per share for orders 
that are routed to Nasdaq in Tape C securities.\10\ Therefore, the 
Exchange believes that the proposed change in Flag A from a rebate of 
$0.0020 per share to a rebate of $0.0015 per share is equitable and 
reasonable because it accounts for the pricing changes on Nasdaq. In 
addition, the proposal allows the Exchange to continue to charge its 
Members a pass-through rate for orders that are routed to Nasdaq. The 
Exchange notes that routing through DE Route is voluntary. Lastly, the 
Exchange also believes that the proposed amendment is non-
discriminatory because it applies uniformly to all Members.
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    \10\ See Nasdaq, Price List--Trading Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2#rebates 
(offering a standard, non-tiered rebate of $0.0015 per share for 
Tape C Securities). See also File No. SR-NASDAQ-2013-114.
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Flag C
    The Exchange believes that its proposal to increase the pass 
through rebate for Members' orders that yield Flag C from $0.0004 to 
$0.0011 per share represents an equitable allocation of reasonable 
dues, fees, and other charges among Members and other persons using its 
facilities because the Exchange does not levy additional fees or offer 
additional rebates for orders that it routes to BX through DE Route. In 
September 2013, BX increased the rebate it provides its customers, such 
as DE Route, from a rebate of $0.0010 per share to a rebate of $0.0011 
per share for orders that are routed to BX and qualify for a volume 
tiered rebate.\11\ Therefore, the Exchange believes that the proposed 
change in Flag C from a rebate of $0.0004 per share to a rebate of 
$0.0011 per share is equitable and reasonable because it accounts for 
the pricing changes on BX. In addition, the proposal allows the 
Exchange to continue to charge its Members a pass-through rate for 
orders that are routed to BX. The Exchange notes that routing through 
DE Route is voluntary. Lastly, the Exchange also believes that the 
proposed amendment is non-discriminatory because it applies uniformly 
to all Members.
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    \11\ See BX, BX Pricing List--Trading & Connectivity, http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing (offering a rebate 
to remove liquidity of $0.0011 per share for MPIDs that add an 
average of 25,000 but less than 1 million shares per day). See also 
File No. SR-BX-2013-051.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    These proposed rule changes do 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 any of these changes 
represent a significant

[[Page 57427]]

departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor EDGX's pricing if they believe that alternatives offer them 
better value. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
Flag A
    The Exchange believes that its proposal to pass through a rebate of 
$0.0015 per share for Members' orders that yield Flag A would increase 
intermarket competition because it offers customers an alternative 
means to route to Nasdaq for the same price as entering orders in Tape 
C securities on Nasdaq directly. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rate would apply uniformly to all Members.
Flag C
    The Exchange believes that its proposal to pass through a rebate of 
$0.0011 per share for Members' orders that yield Flag C would increase 
intermarket competition because it offers customers an alternative 
means to route to BX for the same price as entering orders on BX 
directly, provided those orders would have qualified for a volume based 
increased rebate. The Exchange believes that its proposal would not 
burden intramarket competition because the proposed rate would apply 
uniformly to all 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 \12\ and Rule 19b-4(f)(2) \13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-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-EDGX-2013-34 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-2013-34. 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-2013-34 and should be 
submitted on or before October 9, 2013.

    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. 2013-22651 Filed 9-17-13; 8:45 am]
BILLING CODE 8011-01-P