[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9839-9841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03667]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74296; File No. SR-EDGX-2015-10]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 8.15 Entitled ``Imposition of Fines for Minor Violation(s) of 
Rules''

February 18, 2015.
    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 February 5, 2015, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend Rule 8.15 entitled 
``Imposition of

[[Page 9840]]

Fines for Minor Violation(s) of Rules.'' The text of the proposed rule 
change is available at the Exchange's Web site at www.batstrading.com, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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 Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 8.15 in order to make it 
substantively identical to the corresponding rules on BATS Exchange, 
Inc. (``BATS'') and BATS Y-Exchange, Inc. (``BYX''), as further 
described below. Last year, the Exchange and its affiliate EDGA 
Exchange, Inc. (``EDGA'') received approval to effect a merger (the 
``Merger'') of the Exchange's parent company, Direct Edge Holdings LLC, 
with BATS Global Markets, Inc., the parent of BATS and BYX (together 
with BATS, BYX, EDGA and EDGX, the ``BGM Affiliated Exchanges'').\5\ In 
the context of the Merger, the BGM Affiliated Exchanges are working to 
align certain rules, retaining only intended differences between the 
BGM Affiliated Exchanges. Thus, the proposal set forth below is 
intended to amend Rule 8.15 in order to make it substantively identical 
to corresponding rules on BATS, BYX, and EDGA.\6\
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    \5\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
    \6\ The Exchange understands that BATS, BYX, and EDGA intend to 
file proposed rule changes with the Commission to adopt 
substantively identical rules.
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    Currently, paragraph (d) of Interpretation and Policy to Rule 8.15 
includes Rule 2.5 Interpretation .04: Firm Element of Continuing 
Education Requirement (the ``CE Rule'') under the list of Exchange rule 
violations and recommended fine schedule pursuant to Rule 8.15 related 
to the imposition of fines for minor violations of rules (the 
``MRVP''). The Exchange, however, has no specific reference to the firm 
element of the continuing education requirements under the CE Rule. 
Further, BATS and BYX are proposing to adopt rules that are 
substantively identical to the Exchange's MRVP, except that BATS and 
BYX are not proposing to add a provision covering the CE Rule.\7\ As 
such, the Exchange is proposing to eliminate paragraph (d) of 
Interpretation and Policy .01 to Rule 8.15.
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    \7\ The Exchange notes that BATS and BYX do not currently and 
are not going to propose to include a provision to cover the CE Rule 
currently included in the Exchange's MRVP.
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    The Exchange is also proposing to amend Rule 8.15(a). Currently, 
Rule 8.15(a) provides that, for the purposes of imposing fines pursuant 
to Interpretation .02 of Rule 4.2, the Exchange may aggregate 
individual violations of particular rules and treat such violations as 
a single offense, provided that such aggregation is based upon a 
comprehensive automated surveillance program. The Exchange has never 
aggregated violations under this provision and does not anticipate 
doing so in the future due to the content of Interpretation .02 of Rule 
4.2, which could not, because of its nature, be based on a 
comprehensive automated surveillance program. Interpretation and Policy 
.02 of Rule 4.2 is related to the requirement to furnish Exchange-
related order, market and transaction data. As the Exchange does not 
currently require Members to provide such information and because 
compliance with a requirement to provide data would not likely be 
reviewed based on an automated surveillance (though surveillance would 
likely be performed on such data), the Exchange believes the reference 
to this provision in Rule 8.15 is no longer necessary. Based on the 
foregoing, and in order to conform rules across each of the BGM 
Affiliated Exchanges, the Exchange is proposing to remove this 
provision from Rule 8.15(a).
    Finally, the Exchange is proposing to make several non-substantive 
changes to Rule 8.15. Specifically, in coordination with the 
elimination of paragraph (d) of Interpretation and Policy .01 to Rule 
8.15, the Exchange is proposing to make several corresponding and non-
substantive changes to the numbering of the rule. The Exchange is also 
proposing to add a period to each of the sentences in proposed 
paragraphs (f) and (g) of Interpretation and Policy .01 to Rule 8.15.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \8\ and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in that it is designed promote just and 
equitable principles of trade, remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and, 
in general, protect investors and the public interest. Specifically, 
the Exchange believes that the proposed changes to Rule 8.15(a) and the 
deletion of paragraph (d) of Interpretation and Policy .01 to Rule 8.15 
contribute to the protection of investors and the public interest by 
removing unnecessary language from Exchange Rules and correcting 
certain cross-references therein. The Exchange believes that these 
changes will help to make Exchange Rules clearer and avoid confusion 
for all participants on the Exchange.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    Further, as mentioned above, the proposed rule changes, combined 
with the planned filings for BATS, BYX, and EDGA,\10\ would allow the 
BGM Affiliated Exchanges to provide a consistent set of rules as it 
relates to the imposition of fines for minor violations of rules across 
each of the exchanges. Consistent rules, in turn, will simplify the 
application of the Exchange's regulatory program for Members of the 
Exchange that are also participants on BATS, BYX, and/or EDGA. The 
proposed rule change would provide greater harmonization between rules 
of similar purpose on the BGM Affiliated Exchanges, resulting in 
greater uniformity and less burdensome and more efficient regulatory 
compliance. As such, the proposed rule change would foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities and would remove impediments to and perfect the mechanism of 
a free and open market and a national market system.
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    \10\ See supra notes 6 and 7.
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    Finally, the Exchange believes that the non-substantive changes 
described above will contribute to the protection of investors and the 
public interest by helping to avoid confusion with respect to Exchange 
rules by creating a consistent numbering system in its Rules.

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

    The Exchange does not believe that the proposed rule change will 
impose

[[Page 9841]]

any burden on competition not necessary or appropriate in furtherance 
of the purposes of the act. To the contrary, allowing the Exchange to 
implement substantively identical rules related to the imposition of 
fines for minor violations of rules across each of the BGM Affiliated 
Exchanges does not present any competitive issues, but rather is 
designed to provide greater harmonization among Exchange, BATS, BYX, 
and EDGA rules of similar purpose, resulting in less burdensome and 
more efficient regulatory compliance for common members of the BGM 
Affiliated Exchanges and an enhanced ability of the BGM Affiliated 
Exchanges to fairly and efficiently regulate members, which will 
further enhance competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and paragraph 
of Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange stated that waiver of this requirement is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to have consistent rules related to 
minor violations across each of the BGM Affiliated Exchanges, which it 
believes will both more consistently and effectively regulate members 
of the BGM Affiliated Exchanges as well as reduce the regulatory burden 
on Members of the Exchange that are also members of EDGA, BYX and/or 
BZX. The Commission believes that the proposed rule change presents no 
novel issues and that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission designates the proposed rule change to be 
operative upon filing.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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 proposal 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 No. SR-EDGX-2015-10 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-EDGX-2015-10. 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 such filing will also 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 No. SR-EDGX-2015-10 and should be 
submitted on or before March 17, 2015.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-03667 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P