[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39424-39425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16093]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72532; File No. SR-EDGX-2014-17]


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 3, 2014.
    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 30, 2014, 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 decrease the fee for orders yielding Flag K, 
which routes to NASDAQ OMX PSX (``PSX'') using ROUC or ROUE routing 
strategies. 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\ The term ``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 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 decrease the fee 
for orders yielding Flag K, which routes to PSX using ROUC or ROUE 
routing strategies. In securities priced at or above $1.00, the 
Exchange currently assesses a fee of $0.0030 per share for Members' 
orders that yield Flag K. The Exchange proposes to amend its Fee 
Schedule to decrease this fee to $0.0026 per share from $0.0030 per 
share. 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 charged for routing orders to PSX 
when it does not qualify for a volume tiered reduced fee. The proposed 
change is in response to PSX's July 2014 fee change where PSX decreased 
the fee to remove liquidity via routable order types it charges its 
customers, from a fee of $0.0030 per share to a fee of $0.0026 per 
share.\4\ When DE Route routes to PSX, it will now be charged a 
standard rate of $0.0026 per share.\5\ DE Route will pass through this 
rate on PSX to the Exchange and the Exchange, in turn, will pass 
through this rate to its Members. The Exchange proposes to implement 
this amendment to its Fee Schedule on July 1, 2014.
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    \4\ See PSX, Equity Trader Alert 2014-45, Modifications to PSX 
Pricing Effective July 1, 2014, dated June 26, 2014, available at 
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2014-45.
    \5\ The Exchange notes that to the extent DE Route does or does 
not achieve any volume tiered reduced fee on PSX, its rate for Flag 
K will not change.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\6\ in general, and 
furthers the objectives of Section 6(b)(4),\7\ 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. The Exchange believes that its proposal to decrease the 
pass through fee for Members' orders that yield Flag K from $0.0030 per 
share to $0.0026 per share represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons

[[Page 39425]]

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. Prior to PSX's July 2014 fee change, PSX charged its members, 
which includes DE Route, a fee of $0.0030 per share to remove liquidity 
using non-routable order types, which DE Route passed through to the 
Exchange and the Exchange charged to its Members. In July 2014, PSX 
decreased this fee from $0.0030 per share to $0.0026 per share.\8\ 
Therefore, the Exchange believes that its proposal to pass through a 
fee of $0.0026 per share for orders that yield Flag K is equitable and 
reasonable because it accounts for the pricing changes on PSX. In 
addition, the proposal allows the Exchange to charge its Members a 
pass-through rate for orders that are routed to PSX. Furthermore, 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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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ See PSX, Equity Trader Alert 2014-45, Modifications to PSX 
Pricing Effective July 1, 2014, dated June 26, 2014, available at 
http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2014-45.
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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 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. The Exchange believes that its 
proposal to pass through a fee of $0.0026 per share for Members' orders 
that yield Flag K would increase intermarket competition because it 
offers customers an alternative means to route to PSX for the same 
price as entering orders on PSX directly. 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 \9\ and Rule 19b-4(f)(2) \10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-2014-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-EDGX-2014-17. 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-2014-17, and should be 
submitted on or before July 31, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16093 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P