[Federal Register Volume 80, Number 153 (Monday, August 10, 2015)]
[Notices]
[Pages 47966-47968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19534]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75593; File No. SR-EDGA-2015-29]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use of EDGA Exchange, Inc.

August 4, 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 July 28, 2015, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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 Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 its fees and rebates 
applicable to Members \5\ of the Exchange pursuant to EDGA Rule 15.1(a) 
and (c) (``Fee Schedule'') to: (i) To remove fee codes 5, EA, and ER 
which are appended to trades that inadvertently match against each 
other and share the same Market Participant Identifier (``MPID'') 
(``Internalized Trade''); and (ii) amend the criteria for the MidPoint 
Discretionary Order Add Volume Tier.
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    \5\ 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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    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: (i) To remove fee codes 5, EA, and ER 
which are appended to Internalized Trades; and (ii) amend the criteria 
for the MidPoint Discretionary Order Add Volume Tier.
Fee Codes 5, EA, and ER
    The Exchange proposes to remove fee codes 5, EA, and ER which are 
appended to Internalized Trades as well as footnote 13. During Regular 
Trading Hours,\6\ fee code EA is appended to side of an Internalized 
Trade that adds liquidity while fee code ER is appended to the side of 
an Internalized Trade that removes liquidity. Fee code 5 is appended to 
Internalized Trades that add or remove liquidity during the Pre-Opening 
\7\ and Post-Closing Sessions.\8\ Orders that yield fee codes 5, EA, or 
ER are charged a fee of $0.00015 per share in securities priced at or 
above $1.00 and are charged no fee in securities priced below $1.00. 
Going forward, each side of an Internalized Trade will be subject to 
the Exchange's standard fees or rebates. Under the Exchange's standard 
rates, a rebate of $0.0002 per share is provided to orders that remove 
liquidity in securities priced at or above $1.00. For orders that add 
liquidity, a charge of $0.0005 per share is applied for orders in 
securities priced at or above $1.00, unless the Member qualifies for a 
decreased fee. Orders in securities priced below $1.00 are free, 
regardless of whether they add or remove liquidity.
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    \6\ The ``Regular Trading Hours'' is defined as ``the time 
between 9:30 a.m. and 4:00 p.m. Eastern Time.'' See Exchange Rule 
1.5(y).
    \7\ The ``Pre-Opening Session'' is defined as ``the time between 
8:00 a.m. and 9:30 a.m. Eastern Time.'' See Exchange Rule 1.5(r).
    \8\ The ``Post-Closing Session'' is defined as ``the time 
between 4:00 p.m. and 8:00 p.m. Eastern Time.'' See Exchange Rule 
1.5(s).
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    The Exchange also proposes to delete footnote 13, which states that 
a Member's monthly volume attributed to fee code 5 will be allocated 
accordingly between the added fee codes and removal fee codes when 
determining whether that Member satisfied a certain tier. The Exchange 
proposes to delete footnote 13 as it will no longer be necessary once 
fee code 5 is deleted.
MidPoint Discretionary Order Add Volume Tier
    The Exchange proposes to amend the criteria for the MidPoint 
Discretionary Order Add Volume Tier. Under the tier, a Member qualifies 
for a reduced fee of $0.0003 per share where that Member: (i) Adds an 
ADV of at least 0.20% of the TCV including non-displayed orders that 
add liquidity; and (ii) adds or removes an ADV of at least 500,000 
shares yielding fee codes DM or DT. Fee code DM is applied to non-
displayed orders that add liquidity using MidPoint Discretionary Orders 
\9\ and fee code DT is applied to non-displayed orders that remove 
liquidity using MidPoint Discretionary Orders. Orders that yield fee 
code DM or fee code DT that do not meet to the criteria of the MidPoint 
Discretionary Order Add Volume Tier

[[Page 47967]]

are charged a fee of $0.00050 per share. The Exchange now proposes to 
decrease the TCV requirement to require that a Member adds an ADV of at 
least 0.15% of the TCV including non-displayed orders that add 
liquidity. Easing the criteria of the MidPoint Discretionary Order Add 
Volume Tier is intended to further incentive Members to submit an 
increased number of MidPoint Discretionary Orders to the Exchange, 
thereby increasing the liquidity on the Exchange at the midpoint of the 
National Best Bid or Offer (``NBBO'').
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    \9\ See Exchange Rule 11.8(e) for a description of MidPoint 
Discretionary Orders.
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Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule on August 3, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ 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 also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive. The proposed rule change reflects a competitive 
pricing structure designed to incent market participants to direct 
their order flow to the Exchange. The Exchange believes that the 
proposed rates are equitable and non-discriminatory in that they apply 
uniformly to all Members. The Exchange believes the fees and credits 
remain competitive with those charged by other venues and therefore 
continue to be reasonable and equitably allocated to Members.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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Fee Codes 5, EA, and ER
    The Exchange believes that its proposal to delete fee codes 5, EA, 
and ER, as well as footnote 13 represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities. The Exchange notes that other exchanges 
do not charge separate fees for their member's Internalized Trades, 
thereby subjecting such trades to their standard fees and rebates.\12\ 
In addition, the proposed fees for Internalized Trades are designed to 
continue to discourage Members from inadvertently matching their buy 
and sell orders with one another. Internalized Trades would now be 
subject to the Exchange's standard fees or rebates, therefore 
subjecting such trades to the Exchange's current maker/taker 
spreads.\13\ The charge for Members inadvertently matching with 
themselves is equal to and continues to be no more favorable than the 
Exchange's maker/taker spread, enabling the Exchange to continue to 
discourage potential wash sales. The Exchange also believes that the 
proposed amendments are non-discriminatory because they will be apply 
to all Members uniformly.
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    \12\ Both the Nasdaq Stock Market LLC (``Nasdaq'') and the New 
York Stock Exchange, Inc. (``NYSE'') do not charge separate or 
different fees for Internalized Trades. See the Nasdaq Price List--
Trading Connectivity, available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 (last visited July 28, 2015); and 
NYSE Trading Fees available at https://www.nyse.com/markets/nyse/trading-info/fees (last visited July 28, 2015).
    \13\ The Exchange's standard rates result in a maker/taker 
spread of $0.0003 per share ($0.0005 (fee)--$0.0002 (rebate) = 
$0.0003), equal to the total fee for an Internalized Trade that 
yields fee codes EA and ER ($0.00015 (fee) + $0.00015 (fee) = 
$0.0003). The Exchange will continue to ensure that the fees 
applicable to Internalized Trades are no more favorable than the 
Exchange's prevailing maker/taker spread.
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MidPoint Discretionary Order Add Volume Tier
    The Exchange believes amending the criteria for the MidPoint 
Discretionary Order Add Volume Tier represents an equitable allocation 
of reasonable dues, fees, and other charges among Members and other 
persons using its facilities because it is designed to further 
incentivize Members to increase their use of MidPoint Discretionary 
Orders on EDGA. MidPoint Discretionary Orders increase displayed 
liquidity on the Exchange while also enhancing execution opportunities 
at the midpoint of the NBBO. Promotion of displayed liquidity at the 
NBBO enhances market quality for all Members. Members utilizing 
MidPoint Discretionary Orders provide liquidity at the midpoint of the 
NBBO increasing the potential for an order to receive price 
improvement, and easing the tier's criteria so that Members may be 
eligible for a decreased fee is a reasonable means by which to 
encourage the use of such orders. In addition, the Exchange believes 
that by encouraging the use of MidPoint Discretionary Orders by easing 
the tier's criteria, Members seeking price improvement would be more 
motivated to direct their orders to EDGA because they would have a 
heightened expectation of the availability of liquidity at the midpoint 
of the NBBO. The Exchange also believes that the proposed amendment to 
the MidPoint Discretionary Order Add Volume Tier is non-discriminatory 
because it will be available to all Members.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed amendments to its Fee Schedule 
would 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 change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
Fee Codes 5, EA, and ER
    The Exchange believes that its proposal to delete fee codes 5, EA, 
and ER, as well as footnote 13 will not burden intermarket or 
intramarket competition as Internalized Trades would be subject to the 
Exchange's standard fee sand rebates resulting in rates for 
Internalized Trades that are equal to and no more favorable than 
Members achieving the maker/taker spreads between the Exchange's 
standard add and remove rates. The Exchange believes that its proposal 
would not burden intramarket competition because the proposed rebate 
would apply uniformly to all Members.
MidPoint Discretionary Order Add Volume Tier
    The Exchange believes that its proposal to ease the criteria for 
the MidPoint Discretionary Order Add Volume Tier would increase 
intermarket competition because it would further incentivize Members to 
send an increased amount MidPoint Discretionary Orders to the Exchange 
in order to qualify for the tier's decreased fee. The Exchange believes 
that its proposal would neither increase nor decrease intramarket 
competition because the MidPoint Discretionary Order Add Volume Tier 
would apply uniformly to all Members and the ability of some Members to 
meet the tier would only benefit other Members by contributing to 
increased liquidity at the midpoint of the NBBO and better market 
quality at the Exchange.

[[Page 47968]]

(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 \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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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-EDGA-2015-29 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 Number SR-EDGA-2015-29. 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 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 Number SR-EDGA-2015-29 and should be 
submitted on or before August 31, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19534 Filed 8-7-15; 8:45 am]
 BILLING CODE 8011-01-P