[Federal Register Volume 80, Number 70 (Monday, April 13, 2015)]
[Notices]
[Pages 19715-19721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08335]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74664; File No. SR-EDGX-2015-15]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rules 11.8, 11.9, 11.10, 11.11, and 11.16 Regarding the Limit Up-Limit 
Down Plan

April 7, 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 March 26, 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 
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 the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend Rules 11.8, 11.9, 11.10, 
11.11, and 11.16, in order to conform Exchange Rules to the rules of 
BATS Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc.

[[Page 19716]]

(``BYX'') as they relate to the Plan to Address Extraordinary Market 
Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the 
``Limit Up-Limit Down Plan'' or ``Plan'').\3\
---------------------------------------------------------------------------

    \3\ See BZX and BYX Rules 11.18(e). See Securities Exchange Act 
Release Nos. 69084 (March 8, 2013), 77 FR 16334 (March 14, 2013) 
(SR-BATS-2015-015) [sic]; and 69088 (March 8, 2013), 77 FR 16308 
(March 14, 2013) (SR-BYX-2013-010). See also Securities Exchange Act 
Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (the 
``Limit Up-Limit Down Release'').
---------------------------------------------------------------------------

    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 restructure and amend various Exchange 
Rules related to the applicability of the Plan in order to make the 
Exchange's Rules identical to the corresponding rules on BZX and BYX, 
as further described below. In early 2014, 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 BZX and BYX 
(together with BZX, EDGA, and EDGX, the ``BGM Affiliated 
Exchanges'').\4\ In the context of the Merger, the BGM Affiliated 
Exchanges are working to align certain system and regulatory 
functionality, retaining only intended differences between the BGM 
Affiliated Exchanges. Thus, the proposal set forth below is intended to 
amend Rules 11.8, 11.9, 11.10, 11.11, and 11.16 to make such Rules 
identical to corresponding rules on BZX and BYX related to the Plan. 
The Exchange does not propose to alter its current system functionality 
with regard to compliance with the Plan set forth under current 
Exchange Rules.\5\ Rather, the proposed rule change is designed to 
provide a consistent rule set across each of the BGM Affiliated 
Exchanges.\6\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-043; SR-EDGA-
2013-034).
    \5\ See Securities Exchange Act Release Nos. 69002 (February 27, 
2013), 78 FR 14394 (March 5, 2013) (SR-EDGA-2013-08); and 69003 
(February 27, 2013), 78 FR 14380 (March 5, 2013) (SR-EDGX-2013-08).
    \6\ See BZX and BYX Rules 11.18(e). The Exchange notes that EDGA 
intends to file a proposal very similar to this proposal that will 
align the rules related to the Plan across each of the BGM 
Affiliated Exchanges.
---------------------------------------------------------------------------

Background
    The Plan is designed to prevent trades in individual NMS Stocks 
from occurring outside of specified Price Bands.\7\ As described more 
fully below, the requirements of the Plan are coupled with Trading 
Pauses to accommodate more fundamental price moves (as opposed to 
erroneous trades or momentary gaps in liquidity). All trading centers 
in NMS Stocks, including both those operated by Participants and those 
operated by members of Participants, are required to establish, 
maintain, and enforce written policies and procedures that are 
reasonably designed to comply with the requirements specified in the 
Plan.\8\ As set forth in more detail in the Plan, Price Bands 
consisting of a Lower Price Band and an Upper Price Band for each NMS 
Stock are calculated by the Processors.\9\ When the National Best Bid 
(Offer) is below (above) the Lower (Upper) Price Band, the Processors 
shall disseminate such National Best Bid (Offer) with an appropriate 
flag identifying it as non-executable. When the National Best Bid 
(Offer) is equal to the Upper (Lower) Price Band, the Processors shall 
distribute such National Best Bid (Offer) with an appropriate flag 
identifying it as a Limit State Quotation.\10\ All trading centers in 
NMS Stocks must maintain written policies and procedures that are 
reasonably designed to prevent the display of offers below the Lower 
Price Band and bids above the Upper Price Band for NMS Stocks. 
Notwithstanding this requirement, the Processor shall display an offer 
below the Lower Price Band or a bid above the Upper Price Band, but 
with a flag that it is non-executable. Such bids or offers shall not be 
included in the National Best Bid (``NBB'') or National Best Offer 
(``NBO'') calculations.\11\
---------------------------------------------------------------------------

    \7\ Unless otherwise specified, capitalized terms used in this 
rule filing are based on the defined terms of the Plan.
    \8\ The Exchange is a Participant in the Plan.
    \9\ See Section (V)(A) of the Plan.
    \10\ See Section VI(A) of the Plan.
    \11\ See Section VI(A)(3) of the Plan.
---------------------------------------------------------------------------

    Trading in an NMS Stock immediately enters a Limit State if the 
National Best Offer (Bid) equals but does not cross the Lower (Upper) 
Price Band.\12\ Trading for an NMS stock exits a Limit State if, within 
15 seconds of entering the Limit State, all Limit State Quotations were 
executed or canceled in their entirety. If the market does not exit a 
Limit State within 15 seconds, then the Primary Listing Exchange would 
declare a five-minute Trading Pause pursuant to Section VII of the 
Limit Up-Limit Down Plan, which would be applicable to all markets 
trading the security.\13\ In addition, the Plan defines a Straddle 
State as when the National Best Bid (Offer) is below (above) the Lower 
(Upper) Price Band and the NMS Stock is not in a Limit State. For 
example, assume the Lower Price Band for an NMS Stock is $9.50 and the 
Upper Price Band is $10.50, such NMS stock would be in a Straddle State 
if the National Best Bid were below $9.50, and therefore non-
executable, and the National Best Offer were above $9.50 (including a 
National Best Offer that could be above $10.50). If an NMS Stock is in 
a Straddle State and trading in that stock deviates from normal trading 
characteristics, the Primary Listing Exchange may declare a Trading 
Pause for that NMS Stock.
---------------------------------------------------------------------------

    \12\ See Section VI(B)(1) of the Plan.
    \13\ The primary listing market would declare a trading pause in 
an NMS Stock; upon notification by the primary listing market, the 
Processor would disseminate this information to the public. No 
trades in that NMS Stock could occur during the trading pause, but 
all bids and offers may be displayed. See Section VII(A) of the 
Plan.
---------------------------------------------------------------------------

Proposed Amendment to Rule 11.9
    Currently, Rule 11.9(a)(8) describes the priority of orders that 
are re-priced and displayed in accordance with the Plan. The Exchange 
is proposing to delete this clause and to include this information in 
Rule 11.16(e)(5) in order to adopt a consistent rule set as between the 
Exchange and the other BGM Affiliated Exchanges. The proposed rule text 
for Exchange Rule 11.16(e)(5) is directly based on BZX and BYX Rule 
11.18(e)(5), and is described in greater detail below. The Exchange is 
not proposing to alter the priority handling of orders that are re-
priced and displayed in accordance with the Plan, but rather, is 
proposing to adopt rule text that is identical to that of its 
affiliated exchanges to reduce potential confusion.

[[Page 19717]]

Proposed Amendment to Rule 11.10
    In sum, Rule 11.10(a)(3) sets forth the general rule that no 
executions shall occur outside the Price Bands during Regular Trading 
Hours. The Exchange proposes to amend Rule 11.10(a)(3) to further state 
that the Exchange's procedures for handling executing, re-pricing and 
displaying orders in connection with the Plan are further described in 
proposed Rule 11.16(e), which is discussed below.
    Current Rule 11.10(a)(3)(A) discusses how an order priced within 
the Price Bands may be executed or posted to the EDGX Book. Current 
Rule 11.10(a)(3)(B) explains how the Exchange will re-price an order 
that is priced outside of the Price Bands. The Exchange proposes to 
delete Rules 11.10(a)(3)(A) and (B) and replace them with Rule 
11.16(e)(5). The proposed rule text for Exchange Rule 11.16(e)(5) is 
directly based on BZX and BYX Rule 11.18(e)(5) and is described more 
fully below. The Exchange is not proposing to alter the handling and 
re-pricing of orders that [sic] under the Plan, but rather, is 
proposing to adopt rule text that is identical to that of its 
affiliated exchanges to reduce potential confusion.
    The Exchange also proposes to delete Rule 11.10(a)(3)(C) and does 
not propose to include it as part of the amended rule set. Rule 
11.10(a)(3)(C) states that a description of the behavior of routable 
market and Limit Orders in response to the Plan is found in Rule 
11.11(b)(1). The Exchange believes this provision is no longer 
necessary as the Exchange's procedures for handling, executing, re-
pricing, and displaying orders in connection with the Plan are proposed 
to be described in a single rule, Rule 11.16(e), rather than multiple 
rules as is currently the case.
    The Exchange proposes to delete Rule 11.10(a)(3)(D), which 
discusses the handling of orders with a Short Sale instruction \14\ 
under the Plan, and replace it with Rule 11.16(e)(5)(E). The proposed 
rule text for Exchange Rule 11.16(e)(5)(E) is directly based on BZX and 
BYX Rule 11.18(e)(5)(E) and is described more fully below. The Exchange 
is not proposing to alter the handling of orders with a Short Sale 
instruction under the Plan, but rather, is proposing to relocate the 
text, with modifications, to Rule 11.16(e)(5)(E) as discussed below.
---------------------------------------------------------------------------

    \14\ A ``Short Sale'' instruction is defined as ``[a]n 
instruction on an order which shall have the same meaning as defined 
in Rule 200(a) of Regulation SHO.'' See Exchange Rule 11.6(o).
---------------------------------------------------------------------------

    The Exchange proposes to delete Rule 11.10(a)(3)(E) and replace it 
with Rule 11.16(e)(2) thru (4). Current Rule 11.10(a)(3)(E) states that 
pursuant to Section IV of the Plan all Trading Centers in NMS Stocks, 
including those operated by Members of the Exchange, shall establish, 
maintain, and enforce written policies and procedures that are 
reasonably designed to comply with the requirements specified in 
Section VI of the Plan, and to comply with the Trading Pauses specified 
in Section VII of the Plan. The proposed rule text for Exchange Rule 
11.16(e)(2) thru (4) expands upon this provision and is directly based 
on BZX and BYX Rule 11.18(e)(2) thru (4) described more fully below.
Proposed Amendment to Rule 11.11
    Rule 11.11 discusses the handling of orders that are to be routed 
to away trading centers. Paragraphs (b) thru (d) of Rule 11.11 discuss 
the routing of orders under the Plan. The Exchange proposes to delete 
Rules 11.11(b) thru (d) and replace them with Rule 11.16(e)(5)(D). The 
Exchange proposes to delete in its entirety Rule 11.11(b)(1) as this 
provision is no longer necessary as it is covered succinctly in new 
Rule 11.16(e)(5)(D). Rule 11.11(c), which discusses re-routing of 
orders under the Plan, will be moved to Rule 11.16(e)(5)(D)(i) with 
slight modifications. Rule 11.11(d), which discusses the operation of 
certain routing strategies under the Plan, will be moved to Rule 
11.16(e)(5)(D)(ii) without change. Each of these changes are discussed 
in more detail below.
Proposed Amendment to Rule 11.16
    The Exchange is required by the Plan to establish, maintain, and 
enforce written policies and procedures that are reasonably designed to 
comply with the limit up-limit down and trading pause requirements 
specified in the Plan. In February 2013, the Exchange amended its Rules 
in connection with the implementation of the Plan.\15\ The Exchange now 
proposes to incorporate the provisions discussed above into Rule 
11.16(e) in order to make the Exchange's Rules identical to the 
corresponding rules on BZX and BYX. The proposed amendments to Rule 
11.16(e) are based on BZX and BYX Rules 11.18(e). The Exchange believes 
that the provisions proposed below are reasonably designed to prevent 
executions outside the Price Bands as required by the limit up-limit 
down and trading pause requirements specified in the Plan.
---------------------------------------------------------------------------

    \15\ See supra note 7 [sic].
---------------------------------------------------------------------------

    First, the Exchange proposes to add Rule 11.16(e)(1) to provide 
that all capitalized terms not otherwise defined in paragraph (e) of 
the Rule shall have the meanings set forth in the Plan or Exchange 
Rules, as applicable. The Exchange also proposes to add Rules 
11.16(e)(2) thru (4) described below. These provisions are based on BXZ 
and BYX Rules 11.18(e)(2) thru (4) and designed to replace deleted Rule 
11.10(a)(3)(E), which states that the Exchange and its Members must 
establish policies and procedures that are reasonably designed to 
comply with the Plan. Specifically, the Exchange proposes to add Rule 
11.16(e)(2) to provide that the Exchange is a Participant in, and 
subject to the applicable requirements of, the Plan, which establishes 
procedures to address extraordinary volatility in NMS Stocks. Further, 
the Exchange proposes to add Rule 11.16(e)(3) to provide that Exchange 
Members shall comply with the applicable provisions of the Plan. The 
Exchange believes the requirements of current Rule 11.10(a)(3)(E) would 
be sufficiently covered in proposed Rules 11.16(e)(2) and (3), which 
will help ensure the compliance by its Members with the provisions of 
the Plan as required pursuant to Section II(B) of the Plan.\16\
---------------------------------------------------------------------------

    \16\ See Section II(B) of the Plan.
---------------------------------------------------------------------------

    The Exchange also proposes to add Rule 11.16(e)(4) to replace 
deleted Rule 11.10(a)(3)(E). Rule 11.16(e)(4) would provide that the 
Exchange's System \17\ shall not display or execute buy (sell) interest 
above (below) the Upper (Lower) Price Bands, unless such interest is 
specifically exempted under the Plan. The Exchange believes that this 
requirement is reasonably designed to help ensure the compliance with 
the limit up-limit down and trading pause requirements specified in the 
Plan by preventing executions outside the Price Bands as required 
pursuant to Section VI(A)(1) of the Plan.\18\
---------------------------------------------------------------------------

    \17\ The ``System'' is defined in Exchange Rule 1.5(cc) as ``the 
electronic communications and trading facility designated by the 
Board through which securities orders of Users are consolidated for 
ranking, execution and, when applicable, routing away.''
    \18\ See Section VI(A)(1) of the Plan.
---------------------------------------------------------------------------

    As mentioned above, the Exchange proposes to incorporate the 
provisions of current Rules 11.9(a)(8) and 11.10(a)(3)(A) and (B) 
within Rule 11.16(e)(5) regarding the treatment of certain trading 
interest on the Exchange in order to prevent executions outside the 
Price Bands and to comply with the Plan. The Exchange is proposing to 
delete Rules 11.9(a)(8) and 11.10(a)(3)(A) and (B) to include this 
information in Rule 11.16(e)(5) in order to adopt a consistent rule set 
as between the Exchange and the other BGM

[[Page 19718]]

Affiliated Exchanges. Proposed Rule 11.16(e)(5) is based on BZX and BYX 
Rules 11.18(e)(5).
    Current Rule 11.9(a)(8) describes the priority of orders that are 
re-priced and displayed in accordance with the Plan. Specifically, Rule 
11.9(a)(8) states that if the Upper (Lower) Price Band moves so that 
the price of a buy (sell) order resting on the EDGX Book would 
consequently be above (below) the Upper (Lower) Price Band, such order 
will be re-priced and displayed at a price equal to the Upper (Lower) 
Price Band, provided a new timestamp, and prioritized based on its 
existing timestamp at the time the new Price Bands are established. If 
an order is resting on the EDGX Book at a price equal to the Upper 
(Lower) Price Band, such order will not be re-priced but will be 
provided a new timestamp and prioritized based on its existing 
timestamp at the time the new Price Bands are established.
    Likewise, under proposed Rule 11.16(e)(5), when re-pricing resting 
orders because such orders are above (below) the Upper (Lower) Price 
Band, the Exchange will provide new timestamps to such orders. The 
Exchange will also provide new timestamps to resting orders at the less 
aggressive price to which such orders are re-priced. Any resting 
interest that is re-priced pursuant to Rule 11.16(e)(5) shall maintain 
priority ahead of interest that was originally less aggressively 
priced, regardless of the original timestamps for such orders. The 
Exchange is not proposing to alter the priority handling of orders that 
are re-priced and displayed in accordance with the Plan, but rather, is 
proposing to adopt rule text that is identical to that of its 
affiliated exchanges to reduce potential confusion. While the text of 
current Rule 11.9(a)(8) is not identical to proposed Rule 11.16(e)(5), 
the Exchange proposes to adopt language identical to BZX and BYX Rules 
11.18(e)(5), which it believes more clearly describes system 
functionality.
    Current Rules 11.10(a)(3)(A) and (B) address the handling and re-
pricing of orders under the Plan. Rule 11.10(a)(3)(A) discusses how an 
order priced within the Price Bands may be executed or posted to the 
EDGX Book by stating that a non-routable buy (sell) order that is 
entered into the System at a price less (greater) than or equal to the 
Upper (Lower) Price Band will be posted to the EDGX Book or executed, 
unless: (i) the order includes a Time-in-Force Instruction (``TIF'') of 
Immediate or Cancel (``IOC'') or Fill-or-Kill (``FOK''), in which case 
it will be cancelled if not executed; or (ii) the User has entered 
instructions to cancel \19\ the order. Rule 11.10(a)(3)(B) explains how 
the Exchange will re-price an order that is priced outside of the Price 
Bands by stating that a non-routable buy (sell) order at a price 
greater (less) than the Upper (Lower) Price Band will be re-priced and 
displayed at the price of the Upper (Lower) Price Band. If the price of 
the Upper (Lower) Price Band moves above (below) the non-routable buy 
(sell) order's displayed price, the buy (sell) order will not be 
adjusted further and will remain posted at the original price at which 
it was posted to the EDGX Book. If the Upper (Lower) Price Band crosses 
a non-routable buy (sell) order resting on the EDGX Book, the buy 
(sell) order will be re-priced to the price of the Upper (Lower) Price 
Band.
---------------------------------------------------------------------------

    \19\ Under the Cancel Back instruction, a User may instruct the 
System to immediately cancel the order when, if displayed by the 
System on the EDGX Book at the time of entry, or upon return to the 
System after being routed away, would create a violation of Rule 
610(d) of Regulation NMS or Rule 201 of Regulation SHO, or the order 
cannot otherwise be executed or posted by the System to the EDGX 
Book at its limit price. See Exchange Rule 11.6(b).
---------------------------------------------------------------------------

    Likewise, proposed Rule 11.16(e)(5) discusses the re-pricing and 
cancellation of interest and specifically provides that the Exchange 
systems shall re-price and/or cancel buy (sell) interest that is priced 
or could be executed \20\ above (below) the Upper (Lower) Price Band. 
The Exchange is not proposing to alter the handling or re-pricing of 
orders under the Plan, but rather, is proposing to adopt rule text that 
is identical to that of its affiliated exchanges to reduce potential 
confusion. The Exchange notes that while the format of current Rules 
11.10(a)(3)(A) and (B) are not identical to that of proposed Rule 
11.16(e)(5), the Exchange proposes to include the following provisions 
under Rule 11.16(e)(5) regarding the re-pricing or canceling of certain 
trading interest that are similar to BZX and BYX Rule 11.18(e)(5), 
which if [sic] believes continue to accurately describe system 
functionality and provide additional specificity, the specifics of 
which are described under each subsection of proposed Rule 11.16(e)(5) 
set forth below.
---------------------------------------------------------------------------

    \20\ The Exchange notes that this includes any interest that is 
displayed and/or resting at a less aggressive price but executable 
at a more aggressive price, such as orders subject to price sliding 
and discretionary order types.
---------------------------------------------------------------------------

Market Orders and Orders With a TIF of IOC or FOK
    Proposed Rule 11.16(e)(5)(A) would state that the System will only 
execute Market Orders or orders with a TIF instruction of IOC or FOK at 
or within the Price Bands. If a Market Order or order with a TIF 
instruction of IOC or FOK cannot be fully executed at or within the 
Price Bands, the System shall cancel any unexecuted portion of the 
order without posting such order to the EDGX Book. This provision is 
similar to current Rule 11.10(a)(3)(A). The Rule would also state that 
the display of Market Orders will be handled in accordance with Rule 
11.8(a)(4).
Limit Orders
    The operation of Limit Orders under the Plan would be set forth in 
Rule 11.16(e)(5)(B), which would include the following provisions.
     Orders Not Subject to Re-Pricing. Limit Orders will be 
cancelled if a User has entered instructions not to use the re-pricing 
process set forth in Rule 11.16(e)(5) and such interest to buy (sell) 
is priced above (below) the Upper (Lower) Price Band.
     Incoming Orders. If re-pricing is permitted based on a 
User's instructions, both displayable and non-displayable incoming 
Limit Orders to buy (sell) that are priced above (below) the Upper 
(Lower) Price Band shall be re-priced to the Upper (Lower) Price Band.
     Resting Orders. The System shall re-price resting Limit 
Orders to buy (sell) to the Upper (Lower) Price Band if Price Bands 
move such that the price of resting Limit Orders to buy (sell) would be 
above (below) the Upper (Lower) Price Band. If the Price Bands move 
again and the original limit price of a displayed and re-priced Limit 
Order is at or within the Price Bands and a User has opted into the 
Exchange's optional multiple re-pricing process, as described in Rule 
11.6(l), the System shall re-price such displayed limit interest to the 
most aggressive permissible price up to the order's limit price. All 
other displayed and non-displayed limit interest re-priced pursuant to 
paragraph (e) of Rule 11.16 will remain at its new price unless the 
Price Bands move such that the price of resting Limit Order to buy 
(sell) would again be above (below) the Upper (Lower) Price Band.
Orders With a Pegged Instruction \21\
---------------------------------------------------------------------------

    \21\ The ``Pegged'' instruction is described under Rule 11.6(j).
---------------------------------------------------------------------------

    Currently, the operation of orders with a Pegged instruction under 
the Plan is not specifically addressed in the Exchange's Rules. 
Therefore, the Exchange proposes to adopt Rule 11.16(e)(5)(C) which 
would state that orders with a Pegged instruction to buy

[[Page 19719]]

(sell) shall peg to the specified pegging price or the Upper (Lower) 
Price Band, whichever is lower (higher). Rule 11.16(e)(5)(c) is similar 
to BZX and BYX Rules 11.18(e)(5)(C).
Routable Orders
    The Exchange proposes to delete Rules 11.11(b) thru (d), which 
discuss the routing of orders under the Plan, and replace them with 
Rule 11.16(e)(5)(D). The Exchange is not proposing any changes to its 
routing functionality in connection with the implementation of the 
Plan. The Exchange proposes to delete in its entirety Rule 11.11(b)(1), 
which states when an order may be routed under the Plan, as these 
provisions are no longer necessary as they are covered succinctly in 
new Rule 11.16(e)(5)(D). Rule 11.16(e)(5)(D) would state that if 
routing is permitted based on a User's instructions, orders shall be 
routed away from the Exchange pursuant to Rule 11.11, provided that the 
System shall not route buy (sell) interest at a price above (below) the 
Upper (Lower) Price Band.\22\ Rule 11.11(c), which discusses re-routing 
of orders under the Plan, will be moved to Rule 11.16(e)(5)(D)(i) with 
slight modifications. Current Rule 11.11(c) states that for routing 
strategies that access all Protected Quotations, when the Upper (Lower) 
Price Band adjusts such that the NBO (NBB) becomes executable, a 
routable buy (sell) Market or marketable Limit Order will be eligible 
to be re-routed by the Exchange. Likewise, Rule 11.16(e)(5)(D)(i) would 
state that when the Upper (Lower) Price Band adjusts such that the NBO 
(NBB) becomes executable, a routable buy (sell) Market or marketable 
Limit Order will be eligible to be re-routed by the Exchange if such 
order contains an Aggressive \23\ or Super Aggressive \24\ 
instruction.\25\ Rule 11.11(d), which discusses the operation of 
certain routing strategies under the Plan, will be moved to Rule 
11.16(e)(5)(D)(ii) without change. Rule 11.16(e)(5)(D)(ii) would state 
that routing strategies SWPA and SWPB (together, ``SWP''), as described 
in Rule 11.11(g), are eligible for routing in accordance with the Plan 
as follows: the System will immediately cancel orders utilizing an SWP 
routing strategy when an order to buy utilizing an SWP routing strategy 
has a limit price that is greater than the Upper Price Band or if a 
sell order utilizing an SWP routing strategy has a limit price that is 
less than the Lower Price Band. Proposed Rule 11.16(e)(5)(D)(ii) is 
similar to BZX and BYX Rule 11.13(a)(3)(I).\26\
---------------------------------------------------------------------------

    \22\ This provision shall also replace current Rule 
11.10(a)(3)(C) which states that the description of the behavior of 
routable Market Orders and Limit Orders in response to the Plan is 
set forth in Rule 11.11(b)(1).
    \23\ The ``Aggressive'' instruction is described under Rule 
11.6(n)(1).
    \24\ The ``Super Aggressive'' instruction is described under 
Rule 11.6(n)(2).
    \25\ The Exchange notes that this provision is not included in 
BZX or BYX Rule 11.18(e), but the Exchange believes it provides 
additional detail that was included in current Exchange Rule 
11.11(c) that is helpful to retain in proposed Rule 
11.16(e)(5)(D)(i).
    \26\ The Exchange notes that it proposal to include current Rule 
11.11(d) within proposed Rule 11.16(e)(5)(D)(ii), rather than within 
its Rule 11.11(g) which describes each of its routing strategies, 
differs from the location of the same provision under BZX and BYX 
Rule 11.13(a)(3), which describes BZX and BYX's routing strategies.
---------------------------------------------------------------------------

Orders With a Short Sale Instruction
    The Exchange proposes to replace current Rule 11.10(a)(3)(D), which 
discusses the handling of orders with a Short Sale instruction under 
the Plan, with proposed Rule 11.16(e)(5)(E). The proposed rule text for 
Exchange Rule 11.16(e)(5)(E) is directly based on BZX and BYX Rule 
11.18(e)(5)(E). Current Rule 11.10(a)(3)(D) states that where a short 
sale order is entered into the System with a limit price below the 
Lower Price Band and a short sale price test restriction under Rule 201 
of Regulation SHO is in effect, the System will re-price such order to 
the Lower Price Band as long as the Lower Price Band is at a Permitted 
Price.\27\ When an order with a Short Sale instruction is entered into 
the System with a limit price above the Lower Price Band and a short 
sale price test restriction under Rule 201 of Regulation SHO is in 
effect, the System will re-price such order, if necessary, at a 
Permitted Price. Likewise, proposed Rule 11.16(e)(5)(E) would state 
that where a short sale price restriction under Rule 201 of Regulation 
SHO is in effect, orders with a Short Sale instruction priced below the 
Lower Price Band shall be re-priced to the higher of the Lower Price 
Band or the Permitted Price. The Exchange is not proposing to alter the 
handling of orders with a Short Sale instruction that under the Plan, 
but rather, is proposing to relocate the text, with modifications, to 
Rule 11.16(e)(5)(E) discussed above.
---------------------------------------------------------------------------

    \27\ The term ``Permitted Price'' is defined in Rule 11.6(k).
---------------------------------------------------------------------------

Other Amendments to Rule 11.16
    The Exchange also proposes to relocate Rule 11.16(c), which 
discusses the re-opening of trading following a trading halt, to 
proposed Rule 11.16(e)(6), with minor modifications. Current Rule 
11.16(c) states that the re-opening of trading following a trading halt 
will be conducted pursuant to procedures adopted by the Exchange and 
communicated by notice to its Members. The Exchange recently codified 
its opening process, including its re-opening process follow a halt, 
suspension or pause, under Rule 11.7.\28\ Therefore, with respect to 
the re-opening of trading following a Trading Pause, the Exchange 
proposes to adopt Rule 11.16(e)(6) to provide that the Exchange shall 
re-open the security as set forth in Rule 11.7(e), which is the 
Exchange's Rule describing the Exchange's re-opening process following 
a trading halt, suspension or pause.
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release Nos. 73468 (October 29, 
2014), 79 FR 65450 (November 4, 2014) (SR-EDGX-2014-18); and 73592 
(November 13, 2014), 79 FR 68937 (November 19, 2014) (SR-EDGA-2014-
20).
---------------------------------------------------------------------------

    The Exchange also proposes to delete Rule 11.16(d) which discusses 
when the Exchange may resume trading where the Primary Listing Market 
issues an individual stock trading pause and how individual stock 
trading pauses are to be handled during Phase I of the Plan. 
Interpretation and Policy .01 to Rule 11.16 states that the provisions 
of paragraph (d) of this Rule shall be in effect during a pilot set to 
end on the earlier of the initial date of operations of the Regulation 
NMS Plan to Address Extraordinary Market Volatility or February 4, 
2014. Phase I of the Plan has expired and the Exchange, therefore, 
proposes to delete Rule 11.16(d) as well as Interpretation and Policy 
.01 to Rule 11.16 as they are no longer relevant.
    Lastly, the Exchange proposes the following additional amendments 
to Rule 11.16: (i) renumber paragraph (f) as (d); (ii) delete current 
Rule 11.16(e) and replace it with new paragraph (f) providing that in 
the event of a trading halt, all orders will remain on the EDGA [sic] 
Book unless cancelled by the User; and (iii) adopt paragraph (g), which 
would state that all times referenced in Rule 11.16 shall be Eastern 
Time.
Ministerial Changes
    In light of the above restructuring of the Exchange Rules, the 
Exchange proposes the following ministerial changes to update cross 
references to Rules that are to be deleted or relocated as described 
above:
     amend Rule 11.8(a)(4) regarding the display of Market 
Orders to update a cross-reference to current Rule 11.10(a)(3)(A) to 
proposed Rule 11.16(e)(5),
     amend Rule 11.8(d)(7) regarding the operation of MidPoint 
Match Orders under the Plan to update a cross-

[[Page 19720]]

reference to current Rule 11.10(a)(3) to proposed Rule 11.16(e), and
     amend Rule 11.9(a)(2)(D)(ii) regarding the priority of 
Market Orders displayed on the EDGX Book to delete a cross-reference to 
current Rule 11.10(a)(3)(A).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6(b) of the Act.\29\ 
Specifically, the proposed change is consistent with Section 6(b)(5) of 
the Act,\30\ because it is designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The Exchange 
does not propose to alter its current system functionality with regard 
to compliance with the Plan set forth under current Exchange Rules. 
Rather, the proposed rule change is designed to provide a consistent 
rule set across each of the BGM Affiliated Exchanges. As mentioned 
above, the proposed rule changes, combined with the planned filing for 
EDGA,\31\ would allow the BGM Affiliated Exchanges to provide a 
consistent set of rules as it relates to the compliance with the Plan 
across each of the BGM Affiliated Exchanges. Consistent rules, in turn, 
will simplify the regulatory requirements for Members of the Exchange 
that are also participants on EDGA, BZX and/or BYX. 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 
and understanding of Exchange Rules. 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. Similarly, the Exchange also believes that, by 
harmonizing the rules and across each BGM Affiliated Exchange with 
respect to the Plan, the proposal will enhance the Exchange's ability 
to fairly and efficiently regulate its Members, meaning that the 
proposed rule change is equitable and will promote fairness in the 
market place.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ See supra note 8 [sic].
---------------------------------------------------------------------------

    Finally, the proposal to remove the references to individual stock 
trading pauses promotes just and equitable principles of trade and 
removes impediments to, and perfects the mechanism of, a free and open 
market and a national market system. By eliminating the reference to 
trading pauses outside the scope of the Plan in its rules, the Exchange 
will help to alleviate any potential confusion with respect to such 
pauses, particularly in light of the implementation of the Plan. The 
proposed rule change is also consistent with Section 11A(a)(1) of the 
Act \32\ in that it seeks to assure fair competition among brokers and 
dealers and exchange markets.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    Finally, the Exchange believes that the non-substantive, 
ministerial changes discussed above will contribute to the protection 
of investors and the public interest by helping to avoid confusion with 
respect to Exchange Rules.

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

    The Exchange does not believe that the proposed rule change will 
impose 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 across each of the 
BGM Affiliated Exchanges regarding the Plan does not present any 
competitive issues, but rather is designed to provide greater 
harmonization among Exchange, BYX, BZX, and EDGA rules of similar 
purpose. The proposed rule change should, therefore, resulting in less 
burdensome and more efficient regulatory compliance and understanding 
of Exchange Rules 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)(iii) of the Act \33\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\34\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \34\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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-2015-15 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-2015-15. 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

[[Page 19721]]

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 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-2015-15, and should be submitted on or before May 
4, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-08335 Filed 4-10-15; 8:45 am]
 BILLING CODE 8011-01-P