[Federal Register Volume 80, Number 161 (Thursday, August 20, 2015)]
[Notices]
[Pages 50689-50701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20544]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75700; File No. SR-EDGA-2015-33]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.6, Definitions; Rule 11.8, Order Types; Rule 11.9, Priority of 
Orders; Rule 11.10, Order Execution; and Rule 11.11, Routing to Away 
Trading Centers

August 14, 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 August 11, 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 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to align certain rules with similar 
rules of BATS Exchange, Inc. (``BZX''), BATS Y-Exchange, Inc., 
(``BYX''), and EDGX Exchange, Inc. (``EDGX''). These changes are 
described in detail below and include amending: (i) Rule 11.6, 
Definitions; (ii) Rule 11.8, Order Types; (iii) Rule 11.9, Priority of 
Orders; (iv) Rule 11.10, Order Execution; and (v) Rule 11.11, Routing 
to Away Trading Centers. The Exchange does not propose to implement new 
or unique functionality that has not been previously filed with the 
Commission or is not available on BZX, BYX, or EDGX. The Exchange notes 
that the proposed rule text is based on BZX, BYX, and EDGX rules and is 
different only to the extent necessary to conform to the Exchange's 
current 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

[[Page 50690]]

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
    On June 5, 2014, Chair Mary Jo White asked all national securities 
exchanges to conduct a comprehensive review of each order type offered 
to members and how it operates.\5\ The Exchange notes that a 
comprehensive rule filing clarifying and updating Exchange rules was 
approved by the Commission in November 2014.\6\ However, based on the 
request from Chair White, the Exchange did indeed conduct further 
review of each order types and its operation. The proposals set forth 
below are based on this comprehensive review and are intended to 
clarify and to include additional specificity regarding the current 
functionality of the Exchange's System,\7\ including the operation of 
its order types and order instructions. The proposals set forth below 
are intended to supplement the approved filing based on further review 
conducted by the Exchange and are intended to clarify and enhance the 
understandability of the Exchange's rules related to the ranking and 
execution of orders.
---------------------------------------------------------------------------

    \5\ See Mary Jo White, Chair, Commission, Speech at the Sandler 
O'Neill & Partners, L.P. Global Exchange and Brokerage Conference, 
(June 5, 2014) (available at http://www.sec.gov/News/Speech/Detail/Speech/1370542004312#.VD2HW610w6Y).
    \6\ Securities Exchange Act Release No. 73592 (November 13, 
2014), 79 FR 68937 (November 19, 2014) (SR-EDGA-2014-20).
    \7\ The term ``System'' is defined 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.'' See Exchange Rule 
1.5(cc).
---------------------------------------------------------------------------

    The proposed amendments are also intended to better align certain 
Exchange rules and system functionality with that currently offered by 
BZX, BYX, and EDGX in order to provide a consistent rule set across the 
exchanges. In early 2014, the Exchange and its affiliate, 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'').\8\ In order to provide consistent rules and 
system functionality amongst the Exchange, BZX, BYX, and EDGX, the 
Exchange proposes to amend: (i) Rule 11.6, Definitions; (ii) Rule 11.8, 
Order Types; (iii) Rule 11.9, Priority of Orders; (iv) Rule 11.10, 
Order Execution; and (v) Rule 11.11, Routing to Away Trading Centers.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
---------------------------------------------------------------------------

    Unless otherwise noted, the proposed rule text is based on BZX, 
BYX, or EDGX rules and is different only to the extent necessary to 
conform to the Exchange's current rules.\9\ The proposed amendments do 
not propose to implement new or unique functionality that has not been 
previously filed with the Commission or is not available on BZX, BYX, 
or EDGX.\10\
---------------------------------------------------------------------------

    \9\ To the extent a proposed rule change is based on an existing 
BZX or BYX rule, the language of the BZX, BYX, and Exchange rules 
may differ to extent necessary to conform with existing Exchange 
rule text or to account for details or descriptions included in the 
Exchange Rules but not currently included in BZX or BYX rules based 
on the current structure of such rules.
    \10\ The Exchange's affiliate, EDGX, recently filed a proposal 
making many of the same changes to clarify and enhance EDGX Rules 
that are proposed in this filing with respect to EDGA Rules. See 
infra, note 14. In contrast to that filing, however, which also 
proposed functional changes to the EDGX system so that such system 
operates more like BZX, this proposal does not propose any changes 
that would modify the operation of the EDGA System. Rather, all 
changes proposed herein are intended to clarify and enhance the 
Exchange's Rules or to align such Rules with the Exchange's 
affiliates. The Exchange notes that certain of the proposed changes 
would modify Exchange functionality if all orders with a Post Only 
instruction, as defined below, did not remove contra-side liquidity 
on entry based on the Exchange's fee structure. See infra, notes 18 
and 19. Because orders with a Post Only instruction do, however, 
remove liquidity on entry pursuant to the Exchange's fee structure, 
the Exchange is proposing these changes to maintain rules that are 
consistent with the other BGM Affiliated Exchanges and in the event 
the Exchange's fee structure changes in the future.
---------------------------------------------------------------------------

Rule 11.6, Definitions
    Rule 11.6, Definitions, sets forth in one rule current defined 
terms and order instructions that are utilized in Chapter XI. Rule 11.6 
also includes additional defined terms and instructions to aid in 
describing System\11\ functionality and the operation of the Exchange's 
order types. The Exchange proposes to amend Rule 11.6 to align certain 
sections with the rules of BZX, BYX, and EDGX, including additional 
specificity regarding the operation of Exchange functionality. These 
changes are described below and include: (i) Amending paragraph (d) 
regarding Discretionary Range; (ii) amending subparagraph (l)(1)(A) 
regarding the Price Adjust Re-Pricing instruction; (iii) amending 
subparagraph (l)(1)(B) regarding the Display-Price Sliding instruction; 
(iv) amending subparagraph (l)(2) regarding the Short Sale re-pricing 
instruction; (v) amending subparagraph (l)(3) regarding the re-pricing 
of non-displayed orders; (vi) amending subparagraph (n)(1), (2) and (4) 
regarding the Aggressive, Super Aggressive, and Post Only instructions; 
and (vii) amending subparagraph (q) regarding Immediate-or-Cancel and 
Fill-or-Kill Time-In-Force instructions. As stated above, the proposed 
amendments to Rule 11.6 do not propose to implement new or unique 
functionality that has not been previously filed with the Commission or 
is not available on BZX, BYX, or EDGX. Each of these amendments are 
described in more detail below.
---------------------------------------------------------------------------

    \11\ The term ``System'' is defined 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.'' See Exchange Rule 
1.5(cc).
---------------------------------------------------------------------------

Discretionary Range (Rule 11.6(d))
    Current Functionality. Pursuant to current Rule 11.6(d), 
Discretionary Range is an instruction the User \12\ may attach to an 
order to buy (sell) a stated amount of a security at a specified, 
displayed price with discretion to execute up (down) to a specified, 
non-displayed price. An order with a Discretionary Range instruction 
resting on the EDGA Book \13\ will execute at its least aggressive 
price when matched for execution against an incoming order that also 
contains a Discretionary Range instruction, as permitted by the terms 
of both the incoming and resting order.
---------------------------------------------------------------------------

    \12\ The term ``User'' is defined as ``and Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \13\ The ``EDGA Book'' is defined as ``System's electronic file 
of orders.'' See Exchange Rule 1.5(d).
---------------------------------------------------------------------------

    Proposed Functionality. The Exchange proposes to amend the 
Discretionary Range instruction under Rule 11.6(d) to align with BZX 
Rule

[[Page 50691]]

11.9(c)(10) \14\ and EDGX Rule 11.6(d).\15\ As proposed, amended Rule 
11.6(d) is substantially similar to BZX and BYX Rule 11.9(c)(10) and 
identical to EDGX Rule 11.6(d).
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 74738 (April 16, 
2015), 80 FR 22600 (April 22, 2015) (SR-BATS-2015-09) (Order 
Granting Approval of a Proposed Rule Change to Amend Rules 11.9, 
11.12, and 11.13).
    \15\ See Securities Exchange No. 75479 (July 17, 2015), 80 FR 
43810 (July 23, 2015) (SR-EDGX-2015-33).
---------------------------------------------------------------------------

    First, the Exchange proposes to add specificity to the Exchange's 
rule based on BZX and BYX Rule 11.9(c)(10) to make clear that although 
an order with a Discretionary Range instruction may be accompanied by a 
Displayed \16\ instruction, an order with a Discretionary Range 
instruction may also be accompanied by a Non-Displayed \17\ 
instruction, and if so, will have a non-displayed ranked price as well 
as a discretionary price. The Exchange further proposes to adopt 
language from BZX and Rule 11.9(c)(10) to specifically state that 
resting orders with a Discretionary Range instruction will be executed 
at a price that uses the minimum amount of discretion necessary to 
execute the order against an incoming order. Neither of these proposed 
changes represent changes to functionality, but rather, additional 
specificity in Exchange Rules based on BZX and BYX Rule 11.9(c)(10). 
The Exchange notes that the same changes were recently made to EDGX 
Rule 11.6(d).\18\
---------------------------------------------------------------------------

    \16\ See Exchange Rule 11.6(e)(1).
    \17\ See Exchange Rule 11.6(e)(2).
    \18\ See supra note 15.
---------------------------------------------------------------------------

    Second, the Exchange also proposes to amend its current Rule by 
adding language to 11.6(d) discussing how an order with a Discretionary 
Range instruction would interact with an order with a Post Only 
instruction. Specifically, when an order with a Post Only instruction 
that is entered at the displayed or non-displayed ranked price of an 
order with a Discretionary Range instruction that does not remove 
liquidity on entry pursuant to Rule 11.6(n)(4),\19\ the order with a 
Discretionary Range instruction would be converted to an executable 
order and will remove liquidity against such incoming order.\20\ 
Similar to the proposed amendments to the Aggressive and Super 
Aggressive instructions described below, due to the fact that an order 
with a Discretionary Range instruction contains a more aggressive price 
at which it is willing to execute, the Exchange proposes to treat 
orders with a Discretionary Range instruction as aggressive orders that 
would prefer to execute at their displayed or non-displayed ranked 
price than to forgo an execution due to applicable fees or rebates. 
Accordingly, in order to facilitate transactions consistent with the 
instructions of its Users, the Exchange proposes to execute resting 
orders with a Discretionary Range instruction (and certain orders with 
an Aggressive or Super Aggressive instruction, as described below) 
against incoming orders, when such incoming orders would otherwise 
forego an execution. The Exchange notes that the determination of 
whether an order should execute on entry against resting interest, 
including against a resting order with a Discretionary Range 
instruction, is made prior to determining whether the price of such an 
incoming order should be adjusted pursuant to the Exchange's price 
sliding functionality pursuant to Rule 11.6(l). In other words, an 
execution would have already occurred as set forth above before the 
Exchange would consider whether an order could be displayed and/or 
posted to the EDGA Book, and if so, at what price.
---------------------------------------------------------------------------

    \19\ Under Rule 11.6(n)(4), an order with a Post Only 
instruction or Price Adjust instruction will remove contra-side 
liquidity from the EDGA Book if the order is an order to buy or sell 
a security priced below $1.00 or if the value of such execution when 
removing liquidity equals or exceeds the value of such execution if 
the order instead posted to the EDGA Book and subsequently provided 
liquidity, including the applicable fees charged or rebates 
provided. To determine at the time of a potential execution whether 
the value of such execution when removing liquidity equals or 
exceeds the value of such execution if the order instead posted to 
the EDGA Book and subsequently provided liquidity, the Exchange will 
use the highest possible rebate paid and highest possible fee 
charged for such executions on the Exchange.
    \20\ The Exchange notes that under its current fee structure all 
orders with a Post Only instruction remove liquidity on entry. As 
such, the proposal will not modify the operation of the Exchange at 
this time. However, if, in the future, the Exchange modifies its 
fees such that all orders with a Post Only instruction do not remove 
liquidity then such changes do represent a functional change to the 
System.
---------------------------------------------------------------------------

Examples--Order With a Discretionary Range Instruction Executes Against 
an Order With a Post Only Instruction
    Assume that the National Best Bid or Offer (``NBBO'') is $10.00 by 
$10.05, and the Exchange's BBO is $9.99 by $10.06. Assume that the 
Exchange receives a non-routable order to buy 100 shares at $10.00 per 
share designated with discretion to pay up to an additional $0.05 per 
share. Assume further that an order would not remove any liquidity upon 
entry pursuant to the Exchange's economic best interest functionality.
     Assume that the next order received by the Exchange is an 
order with a Post Only instruction to sell 100 shares of the security 
priced at $10.03 per share. The order with a Post Only instruction 
would not remove any liquidity upon entry, and would post to the EDGA 
Book at $10.03. This would, in turn, trigger the discretion of the 
resting buy order with a Discretionary Range instruction and an 
execution would occur at $10.03. The order with a Post Only instruction 
to sell would be treated as the adder of liquidity and the buy order 
with discretion would be treated as the remover of liquidity.
     Assume the same facts as above, but that the incoming 
order with a Post Only instruction is priced at $10.00 instead of 
$10.03. As is true in the example above, the order with a Post Only 
instruction would not remove any liquidity upon entry. Rather than 
cancelling the incoming order with a Post Only instruction to sell back 
to the User, particularly when the resting order with a Discretionary 
Range instruction is willing to buy the security for up to $10.05 per 
share, the Exchange proposes to execute at $10.00 the order with a Post 
Only instruction against the resting buy order with a Discretionary 
Range instruction. As is also true in the example above, the order with 
a Post Only instruction to sell would be treated as the liquidity adder 
and the buy order with discretion would be treated as the liquidity 
remover. As set forth in more detail below, if the incoming order was 
not an order with a Post Only instruction to sell, the incoming order 
could be executed at the ranked price of the order with a Discretionary 
Range instruction without restriction and would therefore be treated as 
the liquidity remover.
    Third, the Exchange proposes to modify the description of the 
process by which it handles incoming orders that interact with 
Discretionary Orders. The Exchange proposes to specify in Rule 11.6(d) 
its proposed handling of a contra-side order that executes against a 
resting Discretionary Order at its displayed or non-displayed ranked 
price or that contains a time-in-force of IOC or FOK and a price in the 
discretionary range by stating that such an incoming order will remove 
liquidity against the Discretionary Order. The Exchange also proposes 
to specify in Rule 11.6(d) its handling of orders that are intended to 
post to the EDGA Book at a price within the discretionary range of an 
order with a Discretionary Range instruction. This includes, but is not 
limited to, an order with a Post Only instruction. Specifically, the 
Exchange proposes to specify in Rule 11.6(d) that any contra-side order 
with a time-in-force other than IOC or FOK and a price within the 
discretionary range but not at the

[[Page 50692]]

displayed or non-displayed ranked price of an order with a 
Discretionary Range instruction will be posted to the EDGA Book and 
then the order with a Discretionary Range instruction would remove 
liquidity against such posted order.
Examples--Order With a Discretionary Instruction Executes Against an 
Order Without a Post Only Instruction
    Assume that the NBBO is $10.00 by $10.05, and the Exchange's BBO is 
$9.99 by $10.06. Assume that the Exchange receives an order to buy 100 
shares of a security at $10.00 per share designated with discretion to 
pay up to an additional $0.05 per share.
     Assume that the next order received by the Exchange is an 
order with a Book Only instruction \21\ to sell 100 shares of the 
security with a TIF other than IOC or FOK priced at $10.03 per share. 
The order with a Book Only instruction would not remove any liquidity 
upon entry and would post to the EDGA Book at $10.03. This would, in 
turn, trigger the discretion of the resting buy order and an execution 
would occur at $10.03. The order with a Book Only instruction to sell 
would be treated as the adder of liquidity and the buy order with 
discretion would be treated as the remover of liquidity.
---------------------------------------------------------------------------

    \21\ The term ``Book Only'' is defined as an ``order instruction 
stating that an order will be matched against an order on the EDGA 
Book or posted to the EDGA Book, but will not route to an away 
Trading Center.'' See Exchange Rule 11.6(n)(3).
---------------------------------------------------------------------------

     Assume the same facts as above, but that the incoming 
order with a Book Only instruction is priced at $10.00 instead of 
$10.03. The order with a Book Only instruction would remove liquidity 
upon entry at $10.00 per share pursuant to the Exchange's order 
execution rule.\22\ Contrary to the examples set forth above, the order 
with a Book Only instruction to sell would be treated as the liquidity 
remover and the resting buy order with discretion would be treated as 
the liquidity adder. The Exchange notes that this example operates the 
same whether an order contains a TIF of IOC, FOK or any other TIF.
---------------------------------------------------------------------------

    \22\ See Exchange Rule 11.10.
---------------------------------------------------------------------------

    Finally, because orders with a Discretionary Range instruction have 
both a price at which they will be ranked and an additional 
discretionary price, the Exchange proposes to expressly state how the 
Exchange handles a routable order with a Discretionary Range 
instruction by stating that such an order will be routed away from the 
Exchange at its full discretionary price. As an example, assume the 
NBBO is $10.00 by $10.05 and the Exchange's BBO is $9.99 by $10.06. If 
the Exchange receives a routable order with a Discretionary Range 
instruction to buy at $10.00 with discretion to pay up to an additional 
$0.05 per share, the Exchange would route the order as a limit order to 
buy at $10.05. Any unexecuted portion of the order would be posted to 
the EDGA Book with a ranked price of $10.00 and discretion to pay up to 
$10.05.
    The Exchange notes that it has historically treated orders with a 
Discretionary Range instruction as relatively passive orders and as 
orders that, once posted to the EDGA Book, would in all cases be 
treated as the liquidity provider. The changes proposed above will 
change the handling of orders with a Discretionary Range instruction 
such that such orders are more aggressive and, thus, such orders will 
execute on the Exchange in additional circumstances than they do 
currently without regard to such orders' status as resting orders. In 
turn, orders with a Discretionary Range instruction resting on the EDGA 
Book may be treated as liquidity removers under certain circumstances, 
as outlined above.
Re-Pricing (Rule 11.6(l))
    The Exchange currently offers re-pricing instructions which, in all 
cases, result in the ranking and/or display of an order at a price 
other than its limit price in order to comply with applicable 
securities laws and Exchange Rules. Specifically, the Exchange 
currently offers re-pricing instructions to ensure compliance with 
Regulation NMS and Regulation SHO. The re-pricing instructions 
currently offered by the Exchange re-price and display an order upon 
entry and in certain cases again re-price and re-display an order at a 
more aggressive price based on changes in the NBBO. Rule 11.6(l) sets 
forth the re-pricing instructions currently available to Users with 
regard to Regulation NMS compliance--Price Adjust, and Display-Price 
Sliding, as well as a separate re-pricing process with regard to 
Regulation SHO compliance. As described below, the Exchange now 
proposes to amend its re-pricing instructions to align and streamline 
Exchange rules with those of BZX, BYX, and EDGX. As above, the Exchange 
notes that the proposed changes are intended to clarify and enhance 
Exchange Rules or to align such Rules with the other BGM Affiliated 
Exchanges but will not modify the current operation of the System 
because of the Exchange's current fee structure and because all orders 
with a Post Only instruction currently will remove liquidity from the 
Exchange if they interact with contra-side liquidity.
Re-Pricing Instructions To Comply With Rule 610(d) of Regulation NMS
    The Exchange proposes to amend its re-pricing instructions to 
comply with Rule 610(d) of Regulation NMS as follows: (i) Amend the 
Price Adjust instruction under Rule 11.6(l)(1)(A) to: (A) Divide the 
rule into subparagraphs (i), (ii), and (iii); (B) clarify the order 
must be a Locking Quotation \23\ or Crossing Quotation \24\ of an 
external market; and (C) propose new subparagraph (iv) described below; 
and (ii) amend the Displayed Price Sliding instruction under Rule 
11.6(l)(1)(B) to: (A) Change references from ``Displayed Price 
Sliding'' to ``Display-Price Sliding''; (B) replace the text of Rule 
11.6(l)(1)(B) with text that is substantially similar to BZX and BYX 
Rules 11.19(g)(1) and identical to EDGX Rule 11.6(l)(1)(B).
---------------------------------------------------------------------------

    \23\ The term ``Locking Quotation'' is defined as ``[t]he 
display of a bid for an NMS stock at a price that equals the price 
of an offer for such NMS stock previously disseminated pursuant to 
an effective national market system plan, or the display of an offer 
for an NMS stock at a price that equals the price of a bid for such 
NMS stock previously disseminated pursuant to an effective national 
market system plan in violation of Rule 610(d) of Regulation NMS.'' 
See Exchange Rule 11.6(g).
    \24\ The term ``Crossing Quotation'' is defined as ``[t]he 
display of a bid (offer) for an NMS stock at a price that is higher 
(lower) than the price of an offer (bid) for such NMS stock 
previously disseminated pursuant to an effective national market 
system plan in violation of Rule 610(d) of Regulation NMS.'' See 
Exchange Rule 11.6(c).
---------------------------------------------------------------------------

Price Adjust Re-Pricing (Rule 11.6(l)(1)(A))
    Under the Price Adjust instruction, where a buy (sell) order would 
be a Locking Quotation or Crossing Quotation if displayed by the System 
on the EDGA Book at the time of entry, the order will be displayed and 
ranked \25\ at a price that is one Minimum Price Variation lower 
(higher) than the Locking Price.\26\ The Exchange proposes to modify 
the operation of the Price Adjust instruction such that an order must 
be a Locking Quotation or Crossing Quotation of an external market, not 
the EDGA Book, in order be eligible for the re-pricing. This change 
will provide additional specificity within the Exchange's rules 
regarding the applicability of the Price Adjust

[[Page 50693]]

instruction as well as align the description with the Price Adjust 
process described under BZX and BYX Rules 11.9(g)(2),\27\ and EDGX Rule 
11.6(l)(1)(A). This change is also consistent with display-price 
sliding on BZX and Display-Price Sliding discussed below, under which 
orders are only re-priced where they are a Locking Quotation or 
Crossing Quotation of an external market, and not the BZX order book or 
EDGA Book, as applicable. Other than as described above, these 
provisions will remain unchanged and be set forth under subparagraph 
(i), so that the Exchange may renumber the following provisions of Rule 
11.6(l)(1)(A) as set forth below.
---------------------------------------------------------------------------

    \25\ For purposes of the description of the re-pricing 
instructions under proposed Rule 11.6(l), the terms ``ranked'' and 
``priced'' are synonymous and used interchangeably.
    \26\ The term ``Locking Price'' is defined as ``[t]he price at 
which an order to buy (sell), that if displayed by the System on the 
EDGA Book, either upon entry into the System, or upon return to the 
System after being routed away, would be a Locking Quotation.'' See 
Exchange Rule 11.6(f).
    \27\ The description of the Price Adjust process under BATS Rule 
11.9(g)(2), states that ``[a]n order eligible for display by the 
Exchange that, at the time of entry, would create a violation of 
Rule 610(d) of Regulation NMS by locking or crossing a Protected 
Quotation of an external market will be ranked and displayed by the 
System at one minimum price variation below the current NBO (for 
bids) or to one minimum price variation above the current NBB (for 
offers) . . .'' (emphasis added). Thus, an order will only be re-
priced pursuant to its Price Adjust process where it locks or 
crosses a Protected Quotation of an external market, and not BATS. 
The Exchange notes that this reflects a recent change to BATS Rule 
11.9(g)(2). See Securities Exchange Act Release No. 75324 (June 29, 
2015) (SR-BATS-2015-47) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change to Amend Rule 11.9 of BATS 
Exchange, Inc., to Modify its Price Adjust Functionality).
---------------------------------------------------------------------------

    The Exchange proposes to restructure the provisions of the current 
rule by separating rule text and adopting additional subparagraph 
references, subparagraph (ii) and (iii).
    The Exchange also proposes to add new subparagraph (iv) to Rule 
11.6(l)(1)(A) which would cover where an order with a Price Adjust 
instruction and a Post Only instruction would be a Locking Quotation or 
Crossing Quotation of the Exchange. The proposed amendments to Rule 
11.6(l)(1)(A) are based on BZX and BYX Rules 11.9(g)(2)(D) and are 
identical to EDGX Rule 11.6(l)(1)(A)(iv). To the extent the amended 
text of Exchange Rule 11.6(l)(1)(A) differs from BZX and BYX Rules 
11.9(g)(2)(D), such differences are necessary to conform the rule with 
existing rule text.
    As noted above, an order subject to the Price Adjust instruction 
will only be re-priced where it would be a Locking Quotation of 
Crossing Quotation of an external market, and not the Exchange. In such 
case, any display-eligible order with a Price Adjust instruction and a 
Post Only instruction that would be a Locking Quotation or Crossing 
Quotation of the Exchange upon entry will be executed as set forth in 
Rule 11.6(n)(4) \28\ or cancelled. For example, assume the NBBO is 
$10.00 by $10.01 and an order to sell at $10.01 is resting on the EDGA 
Book. Further assume that no other Trading Center \29\ is displaying an 
order to sell at $10.01. Assume that the Exchange receives an order to 
buy with a Post Only instruction and Price Adjust instruction at 
$10.01. The incoming order to buy will be cancelled unless, pursuant to 
Rule 11.6(n)(4), the value of such execution when removing liquidity 
equals or exceeds the value of such execution if the order instead 
posted to the EDGA Book and subsequently provided liquidity. The 
incoming order to buy will not be posted to the EDGA Book and re-priced 
pursuant to the Price Adjust instruction.
---------------------------------------------------------------------------

    \28\ See supra notes 19 and 20.
    \29\ The term ``Trading Center'' is defined as ``[o]ther 
securities exchanges, facilities of securities exchanges, automated 
trading systems, electronic communications networks or other broker 
dealers.'' See Exchange Rule 11.6(r).
---------------------------------------------------------------------------

Displayed Price Sliding (Rule 11.6(l)(1)(B))
    The Exchange proposes to amend the Displayed Price Sliding 
instruction under Rule 11.6(l)(1)(B) to: (A) change the name from 
``Displayed Price Sliding'' to ``Display-Price Sliding''; and (B) 
replace the text of Rule 11.6(l)(1)(B) with text that is identical to 
BZX Rule 11.19(g)(1), BYX Rule 11.9(g)(1), and EDGX Rule 11.6(l)(1)(B). 
The Exchange does not propose to modify the operation of Display-Price 
Sliding. It simply seeks to replace the rule text with of Rule 
11.6(l)(1)(B) with text that is substantially similar to BZX and BYX 
Rules 11.9(g)(1) and identical to EDGX Rule 11.6(l)(1)(B). The Display-
Price Sliding instruction operates in an identical manner as the 
Display-Price Sliding instruction on EDGX and the display price sliding 
process on BZX and BYX. To the extent the amended text of Exchange Rule 
11.6(l)(1)(B) differs from BZX and BYX Rules 11.9(g)(1), such 
differences are necessary to conform the rule to existing rule text. 
The Exchange does not propose to modify the operation of the re-pricing 
of orders with a Non-Displayed instruction. Replacing the rule text 
would enable the Exchange to include substantially similar or identical 
rule text describing processes that operate in the same manner across 
each of the BGM Affiliated Exchanges, thus avoiding potential 
confusion.
    In sum, Display-Price Sliding is an order instruction requiring 
that where an order would be a Locking Quotation or Crossing Quotation 
of an external market if displayed by the System on the EDGA Book at 
the time of entry, such order will be ranked at the Locking Price and 
displayed by the System at one Minimum Price Variation lower (higher) 
than the Locking Price for orders to buy (sell). A User may elect for 
the Display-Price Sliding instruction to only apply where their 
display-eligible order would be a Locking Quotation of an external 
market upon entry (``Lock Only''). In such cases, the User's display-
eligible order will be cancelled if the order would be a Crossing 
Quotation of an external market upon entry.
    For example, assume the Exchange has a posted and displayed bid to 
buy at $10.10 and a posted and displayed offer to sell $10.13. Assume 
the NBBO is $10.10 by $10.12. If the Exchange receives an order with a 
Book Only instruction to buy at $10.12, the Exchange will rank the 
order to buy at $10.12 and display the order at $10.11 because 
displaying the bid at $10.12 would cause it to be a Locking Quotation 
of an external market's Protected Offer to sell for $10.12. If the NBO 
then moved to $10.13, the Exchange would un-slide the bid to buy and 
display it at its ranked price (and limit price) of $10.12.
    As an example of the Lock-Only option for Display-Price Sliding, 
assume the Exchange has a posted and displayed bid to buy at $10.10 and 
a posted and displayed offer to sell at $10.14. Assume the NBBO is 
$10.10 by $10.12. If the Exchange receives an order with a Book Only 
instruction to buy 100 shares at $10.13 and the User has elected the 
Lock-Only option for Display-Price Sliding, the Exchange will cancel 
the order back to the User. To reiterate a basic example of Display-
Price Sliding, if instead the User applied Display-Price Sliding (and 
not the Lock-Only option for Display-Price Sliding), the Exchange would 
rank the order to buy at $10.12 and display the order at $10.11 because 
displaying the bid at $10.13 would cause it to be a Crossing Quotation 
of an external market's Protected Offer to sell for $10.12. If the NBO 
then moved to $10.13, the Exchange would un-slide the bid to buy and 
display it at $10.12.
    An order subject to the Display-Price Sliding instruction retains 
its original limit price irrespective of the prices at which such order 
is ranked and displayed. An order subject to the Display-Price Sliding 
instruction is displayed at the most aggressive price possible and 
receives a new time stamp should the NBBO change such that the order 
would no longer be a Locking Quotation or Crossing Quotation of an 
external market. All orders that are re-ranked and re-displayed 
pursuant to the Display-Price Sliding instruction retain their priority 
as compared to other

[[Page 50694]]

orders subject to the Display-Price Sliding instruction based upon the 
time such orders were initially received by the Exchange. Following the 
initial ranking and display of an order subject to the Display-Price 
Sliding instruction, an order will only be re-ranked and re-displayed 
to the extent it achieves a more aggressive price, provided, however, 
that the Exchange will re-rank an order at its displayed price in the 
event such order's displayed price would be a Locking Quotation or 
Crossing Quotation. Such event will not result in a change in priority 
for the order at its displayed price. This will avoid the potential of 
a ranked price that crosses the Protected Quotation displayed by such 
external market, which could, in turn, lead to a trade through of such 
Protected Quotation at such ranked price. The Exchange notes that, as 
described below, when an external market crosses the Exchange's 
Protected Quotation and the Exchange's Protected Quotation is a 
displayed order subject to Display-Price Sliding, the Exchange re-ranks 
such order at the displayed price. Thus, the order displayed by the 
Exchange will still be ranked and permitted to execute at a price that 
is consistent with Rule 611(b)(4) of Regulation NMS.\30\
---------------------------------------------------------------------------

    \30\ 17 CFR 242.611(b)(4). See also See also Securities Exchange 
Act Release Nos. 64475 (May 12, 2011), 76 FR 28830, 28832 (May 18, 
2011) (SR-BATS-2011-015); 67657 (August 14, 2012), 77 FR 50199 
(August 20, 2012) (SR-BATS-2012-035); 68791 (January 31, 2013), 78 
FR 8617 (February 6, 2013) (SR-BATS-2013-007) (``BATS Display-Price 
Sliding Releases'').
---------------------------------------------------------------------------

    The ranked and displayed prices of an order subject to the Display-
Price Sliding instruction may be adjusted once or multiple times 
depending upon the instructions of a User and changes to the prevailing 
NBBO. Multiple re-pricing is optional and must be explicitly selected 
by a User before it will be applied. The Exchange's default Display-
Price Sliding instruction will only adjust the ranked and displayed 
prices of an order upon entry and then the displayed price one time 
following a change to the prevailing NBBO, provided however, that if 
such an order's displayed price becomes a Locking Quotation or Crossing 
Quotation then the Exchange will adjust the ranked price of such order 
and it will not be further re-ranked or re-displayed at any other 
price. Orders subject to the optional multiple price sliding process 
will be further re-ranked and re-displayed as permissible based on 
changes to the prevailing NBBO.
    As an example of the multiple re-pricing option for Display-Price 
Sliding, assume the Exchange has a posted and displayed bid to buy at 
$10.10 and a posted and displayed offer to sell at $10.14. Assume the 
NBBO is $10.10 by $10.12. If the Exchange receives an order with a Book 
Only instruction to buy at $10.13, the Exchange would rank the order to 
buy at $10.12 and display the order at $10.11 because displaying the 
bid at $10.13 would cause it to be a Crossing Quotation of an external 
market's Protected Offer to sell for $10.12. If the NBO then moved to 
$10.13, the Exchange would un-slide the bid to buy, rank it at $10.13 
and display it at $10.12. Where the User did not elect the multiple re-
pricing option for Display-Price Sliding, the Exchange would not 
further adjust the ranked or displayed price following this un-slide. 
However, under the multiple re-pricing option, if the NBO then moved to 
$10.14, the Exchange would un-slide the bid to buy and display it at 
its full limit price of $10.13.
    Pursuant to proposed Rule 11.6(l)(1)(B)(iv), any display-eligible 
order with a Post Only instruction that would be a Locking Quotation or 
Crossing Quotation of the Exchange upon entry will be executed as set 
forth in Rule 11.6(n)(4) or cancelled. Consistent with the principle of 
not re-pricing orders to avoid executions, in the event the NBBO 
changes such that an order with a Post Only instruction subject to 
Display-Price Sliding instruction would be ranked at a price at which 
it could remove displayed liquidity from the EDGA Book, the order will 
be executed as set forth in Rule 11.6(n)(4) or cancelled.\31\
---------------------------------------------------------------------------

    \31\ As noted above, the Exchange will execute an order with a 
Post Only instruction in certain circumstances where the value of 
such execution when removing liquidity equals or exceeds the value 
of such execution if the order instead posted to the EDGA Book and 
subsequently provided liquidity, including the applicable fees 
charged or rebates provided. See supra notes 19 and 20.
---------------------------------------------------------------------------

    Pursuant to proposed Rule 11.6(l)(1)(B)(v), an order with a Post 
Only instruction will be permitted to post and be displayed opposite 
the ranked price of orders subject to Display-Price Sliding 
instruction. In the event an order subject to the Display-Price Sliding 
instruction is ranked on the EDGA Book with a price equal to an 
opposite side order displayed by the Exchange, it will be subject to 
processing as set forth in Rule 11.10(a)(4), which is described in 
greater detail below.
    For example, assume the Exchange has a posted and displayed bid to 
buy at $10.10 and a posted and displayed offer to sell at $10.12. 
Assume the NBBO (including Protected Quotations of other external 
markets) is also $10.10 by $10.12. If the Exchange receives an order 
with a Post Only instruction to buy at $10.12 per share, unless 
executed pursuant to Rule 11.6(n)(4),\32\ the Exchange would cancel the 
order back to the User because absent the order with a Post Only 
instruction, the order to buy at $10.12 would be able to remove the 
order to sell $10.12, and, as explained above, the Exchange would no 
longer offer re-pricing to avoid executions against orders displayed by 
the Exchange.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

    If the Exchange did not have a displayed offer to sell at $10.12 in 
the example above, but instead the best offer on the EDGA Book was 
$10.13, the Exchange would apply Display-Price Sliding to the incoming 
order to buy by ranking such order at $10.12 and displaying the order 
at $10.11. The EDGA Book would now be displayed as $10.11 by $10.13. 
Assume, however, that after price sliding the incoming order to buy 
from $10.12 to a display price of $10.11, the Exchange received an 
order with a Post Only instruction to sell at $10.12, thus joining the 
NBO. The order with a Post Only instruction would be permitted to post 
and be displayed opposite the ranked price of orders subject to 
display-price sliding. Accordingly, the Exchange would allow such 
incoming order with a Post Only instruction to sell at $10.12 to post 
and display on the EDGA Book, as described above, with an opposite side 
order subject to Display-Price Sliding displayed at $10.11. Assume that 
the next Protected Offer displayed by all external markets other than 
the Exchange moved to $10.13. In this situation the Exchange would un-
slide but then cancel the bid at $10.12 because, as proposed, in the 
event the NBBO changes such that an order with a Post Only instruction 
subject to Display-Price Sliding would un-slide and would be ranked at 
a price at which it could remove displayed liquidity from the EDGA Book 
(i.e., when the Exchange is at the NBB or NBO) the Exchange proposes to 
execute \33\ or cancel such order.
---------------------------------------------------------------------------

    \33\ Id.
---------------------------------------------------------------------------

Re-Pricing Instructions To Comply With Rule 201 of Regulation SHO
    Under Rule 11.6(l)(2), an order to sell with a Short Sale 
instruction that, at the time of entry, could not be executed or 
displayed in compliance with Rule 201 of Regulation SHO will be re-
priced by the System at the Permitted Price.\34\ The

[[Page 50695]]

default short sale re-pricing process will only re-price an order upon 
entry and one additional time to reflect a decline in the NBB. 
Depending upon the instructions of a User, to reflect declines in the 
NBB the System will continue to re-price and re-display a short sale 
order at the Permitted Price down to the order's limit price. In the 
event the NBB changes such that the price of an order with a Non-
Displayed instruction subject to Rule 201 of Regulation SHO would be a 
Locking Quotation or Crossing Quotation, the order will receive a new 
time stamp, and will be re-priced by the System to the mid-point of the 
NBBO.
---------------------------------------------------------------------------

    \34\ The term ``Permitted Price'' is defined as ``[t]he price at 
which a sell order will be displayed at one Minimum Price Variation 
above the NBB.'' See Exchange Rule 11.6(k).
---------------------------------------------------------------------------

    Rule 11.6(l)(2) states that: (i) When a Short Sale Circuit Breaker 
is in effect, the System will execute a sell order with a Displayed and 
Short Sale instruction at the price of the NBB if, at the time of 
initial display of the sell order with a Short Sale instruction, the 
order was at a price above the then current NBB; (ii) orders with a 
Short Exempt instruction will not be subject to re-pricing under 
amended Rule 11.6(l)(2); and (iii) the re-pricing instructions to 
comply with Rule 610(d) of Regulation NMS will continue to be ignored 
for an order to sell with a Short Sale instruction when a Short Sale 
Circuit Breaker is in effect and the re-pricing instructions to comply 
with Rule 201 of Regulation SHO under this Rule will apply.
    The Exchange proposes to make the below changes to align the 
description of the Exchange's short sale re-pricing process under Rule 
11.6(l)(2) with BZX and BYX Rules 11.9(g)(5) and EDGX Rule 11.6(l)(2). 
Specifically, the Exchange proposed to amend Rule 11.6(l)(2)(A) to 
remove the last sentence which states that, ``[a]n order to sell with a 
Short Sale instruction that is re-priced pursuant to this paragraph 
will be ranked at the Permitted Price.'' No such phrase is included in 
the BZX and BYX Rules 11.9(g)(5)(A) or EDGX Rule 11.6(l)(2). The 
Exchange also believes this sentence is superfluous, as the description 
of the short sale re-pricing process currently references to which 
prices such orders are to be re-priced and the price of such orders is 
the equivalent to the price at which the order is to be ranked on the 
EDGA Book for purposes of Exchange Rule 11.9. The Exchange also 
proposes to amend Rule 11.6(l)(2)(D) to align with BZX and BYX Rules 
11.9(g)(6) and EDGX Rule 11.6(l)(2)(D) to state that where an order is 
subject to either a Display-Price Sliding instruction or a Price Adjust 
instruction and also contains a Short Sale instruction when a Short 
Sale Circuit Breaker is in effect, the re-pricing instructions to 
comply with Rule 201 of Regulation SHO will apply. The Exchange does 
not propose this change to alter the meaning of Rule 11.6(l)(2)(D), but 
rather, to align the language with BZX and BYX Rule 11.9(g) and EDGX 
Rule 11.6(l)(2)(D) in order to provide consistent rules across the 
Exchange and BZX.
Re-Pricing of Orders With a Non-Displayed Instruction (Rule 11.6(l)(3))
    The Exchange proposes to amend Rule 11.6(l)(3) to align with BZX 
and BYX Rules 11.9(g)(4) and to be identical to EDGX Rule 11.6(l)(3). 
To the extent the amended text of Exchange Rule 11.6(l)(3) differs from 
BZX and BYX Rules 11.9(g)(4), such differences are necessary to conform 
the rule to existing rule text. The Exchange does not propose to modify 
the operation of the re-pricing of orders with a Non-Displayed 
instruction. It simply seeks to replace the rule text with of Rule 
11.6(l)(3) with text that is substantially similar to BZX and BYX Rules 
11.9(g)(4) and identical to EDGX Rule 11.6(l)(3). The re-re-pricing of 
orders with a Non-Displayed instruction operates in an identical manner 
as the repricing of non-displayed orders on BZX, BYX, and EDGX. 
Replacing the rule text would enable the Exchange to include 
substantially similar or identical rule text describing processes that 
operate in the same manner across each of the BGM Affiliated Exchanges.
    In sum, Rule 11.6(l)(2) would state that in order to avoid 
potentially trading through Protected Quotations of external markets, 
any order with a Non-Displayed instruction that is subject to the 
Display-Price Sliding or Price Adjust instruction would be ranked at 
the Locking Price on entry. In the event the NBBO changes such that an 
order with a Non-Displayed instruction subject to the Display-Price 
Sliding or Price Adjust instruction would cross a Protected Quotation 
of an external market, the order will receive a new time stamp, and 
will be ranked by the System at the Locking Price. In the event an 
order with a Non-Displayed instruction has been re-priced by the 
System, such order with a Non-Displayed instruction is not re-priced by 
the System unless it again would cross a Protected Quotation of an 
external market. This functionality is equivalent to the handling of 
displayable orders pursuant to the Display-Price Sliding instruction 
except that such orders will not have a displayed price.
Aggressive (Rule 11.6(n)(1))
    Aggressive is an order instruction that directs the System to route 
the order if an away Trading Center crosses the limit price of the 
order resting on the EDGA Book. Based on BZX Rule 11.13(a)(4)(A), the 
Exchange proposes to also amend Rule 11.6(n)(1) to state that any 
routable order with a Non-Displayed instruction that is resting on the 
EDGA Book and is crossed by an away Trading Center will be 
automatically routed to the Trading Center displaying the Crossing 
Quotation. To the extent the amended text of Exchange Rule 11.6(n)(1) 
differs from BZX Rule 11.13(a)(4)(A), such differences are necessary to 
conform the rule with existing rule text. Lastly, the proposed rule 
text is identical to EDGX Rule 11.6(l)(1).
Super Aggressive (Rule 11.6(n)(2))
    Super Aggressive is an order instruction that directs the System to 
route an order when an away Trading Center locks or crosses the limit 
price of the order resting on the EDGA Book. A User may designate an 
order as Super Aggressive solely to routable orders posted to the EDGA 
Book with remaining size of an Odd Lot. Based on BZX Rule 
11.13(b)(4)(C),\35\ the Exchange proposes to amend Rule 11.6(n)(2) to 
state that when any order with a Super Aggressive instruction is locked 
by an incoming order with a Post Only instruction that does not remove 
liquidity pursuant to Rule 11.6(n)(4),\36\ the order with a Super 
Aggressive instruction would be converted to an executable order and 
will remove liquidity against such incoming order. Rule 11.6(n)(2) 
would further state that notwithstanding the foregoing, if an order 
that does not contain a Super Aggressive instruction maintains higher 
priority than one or more Super Aggressive eligible orders, the Super 
Aggressive eligible order(s) with lower priority will not be converted, 
as described above, and the incoming order with a Post Only instruction 
will be posted or cancelled in accordance with Rule 11.6(n)(4). To the 
extent the amended text of Exchange Rule 11.6(n)(2) differs from BZX 
Rule 11.13(b)(4)(C), such differences are necessary to conform the rule 
with existing rule text. Lastly, the proposed

[[Page 50696]]

rule text is identical to EDGX Rule 11.6(l)(2).
---------------------------------------------------------------------------

    \35\ See supra note 14.
    \36\ As noted above, the Exchange will execute an order with a 
Post Only instruction where the value of such execution when 
removing liquidity equals or exceeds the value of such execution if 
the order instead posted to the EDGA Book and subsequently provided 
liquidity, including the applicable fees charged or rebates 
provided. See supra note 19. As is also noted above, based on the 
Exchange's current fee structure, currently all orders with a Post 
Only instruction remove liquidity on entry if there is available 
contra-side liquidity. See supra note 20.
---------------------------------------------------------------------------

    The Exchange proposes to apply this logic in order to facilitate 
executions that would otherwise not occur due to the Post Only 
instruction requirement to not remove liquidity. Because a Super 
Aggressive Re-Route eligible order is willing to route to an away 
Trading Center and remove liquidity (i.e., pay a fee at such Trading 
Center) when it becomes either a Locking Quotation or Crossing 
Quotation, the Exchange believes it is reasonable and consistent with 
the instruction to force an execution between an incoming order with a 
Post Only instruction and an order that has been posted to the EDGA 
Book with the Super Aggressive instruction. The Exchange notes that the 
determination of whether an order should execute on entry against 
resting interest, including against resting orders with a Super 
Aggressive instruction, is made prior to determining whether the price 
of such an incoming order should be adjusted pursuant to the Exchange's 
re-pricing instructions under Rule 11.6(l). Like BZX Rule 
11.13(b)(4)(C), the Exchange has limited the proposed language to 
orders with a Post Only instruction that would lock the price of an 
order with a Super Aggressive instruction because orders with a Post 
Only instruction that cross resting orders will always remove liquidity 
because it is in their economic best interest to do so.\37\ Also like 
BZX Rule 11.13(b)(4)(C), the Exchange proposes to make clear that 
although it will execute an order with a Super Aggressive instruction 
against an order with a Post Only instruction that would create a 
Locking Quotation, if an order that does not contain a Super Aggressive 
instruction maintains higher priority than one or more Super Aggressive 
eligible orders, the Super Aggressive eligible order(s) with lower 
priority will not be converted, as described above, and the incoming 
order with a Post Only instruction will be posted or cancelled in 
accordance with Rule 11.6(n)(4). The Exchange believes it is necessary 
to avoid applying the Super Aggressive functionality to routable orders 
that are resting behind orders that are not eligible for routing to 
avoid violating the Exchange's priority rule, Rule 11.9.
---------------------------------------------------------------------------

    \37\ See supra note 19.
---------------------------------------------------------------------------

Example--Super Aggressive Re-Route and Orders With a Post Only 
Instruction
    Assume that the Exchange receives an order to buy 300 shares of a 
security at $10.10 per share designated with a Super Aggressive 
instruction. Assume further that the NBBO is $10.09 by $10.10 when the 
order is received, and the Exchange's lowest offer is priced at $10.11. 
The Exchange will route the order away from the Exchange as a bid to 
buy 300 shares at $10.10. Assume that the order obtains one 100 share 
execution through the routing process and then returns to the Exchange. 
The Exchange will post the order as a bid to buy 200 shares at $10.10. 
If the Exchange subsequently receives an order with a Post Only 
instruction to sell priced at $10.09 per share, such order will execute 
against the posted order to buy with an execution price of $10.10. The 
posted buy order will be treated as the liquidity provider and the 
incoming order with a Post Only instruction to sell will be treated as 
the liquidity remover, based on Exchange Rule 11.6(n)(4) that executes 
orders with a Post Only instruction upon entry if such execution is in 
their economic interest.
    However, assuming the same facts as above, if the incoming order 
with a Post Only instruction to sell is priced at $10.10 and thus does 
not remove liquidity pursuant to the economic best interest 
functionality, the posted order with a Super Aggressive instruction 
will execute against such order at $10.10. In this scenario, the posted 
order to buy will be treated as the liquidity remover and the incoming 
order with a Post Only instruction to sell will be treated as the 
liquidity provider.
    Finally, assume that the NBBO is $10.10 by $10.11 and that the 
Exchange has a displayed bid to buy 100 shares of a security at $10.10 
and a displayed offer to sell 100 shares of a security at $10.11. 
Assume that the displayed bid has not been designated with the Super 
Aggressive instruction. Assume next that the Exchange receives a second 
displayable bid to buy 100 shares of the same security at $10.10 that 
has been designated as routable and subject to the Super Aggressive 
instruction. Because there is no liquidity to which the Exchange can 
route the order, the second order will post to the EDGA Book as a bid 
to buy at $10.10 behind the original displayed bid to buy at $10.10. If 
the Exchange then received an order with a Post Only instruction to 
sell 100 shares at $10.10 then no execution would occur because the 
incoming order with a Post Only instruction cannot remove liquidity at 
$10.10 based on the economic best interest analysis, the first order 
with priority to buy at $10.10 was not designated with the Super 
Aggressive instruction and the second booked order to buy at $10.10 is 
not permitted to bypass the first order as this would result in a 
violation of the Exchange's priority rule, Rule 11.9.
Post Only (Rule 11.6(n)(4))
    The Exchange proposes to amend the definition of Post Only under 
Rule 11.6(n)(4) to replace an erroneous reference to the Hide Not Slide 
instruction with Display-Price Sliding. In sum, Post Only is an 
instruction that may be attached to an order that is to be ranked and 
executed on the Exchange pursuant to Rule 11.9 and Rule 11.10(a)(4) or 
cancelled, as appropriate, without routing away to another trading 
center except that the order will not remove liquidity from the EDGA 
Book, except as described below. As amended, an order with a Post Only 
instruction and a Display-Price Sliding, rather than Hide Not Slide, or 
Price Adjust instruction will remove contra-side liquidity from the 
EDGA Book if the order is an order to buy or sell a security priced 
below $1.00 or if the value of such execution when removing liquidity 
equals or exceeds the value of such execution if the order instead 
posted to the EDGA Book and subsequently provided liquidity, including 
the applicable fees charged or rebates provided.
Time-In-Force (``TIF'') (Rule 11.6(q))
    The Exchange proposes to amend its TIF instructions to align with 
BZX Rule 11.9(b) and EDGX Rule 11.6(q). To the extent the amended text 
of Exchange Rule 11.6(q) differs from BZX Rule 11.9(b), such 
differences are necessary to conform the rule with existing Exchange 
rule text. The amended text is identical to EDGX Rule 11.6(q).
    First, the Exchange proposes to align the definition of Immediate-
or-Cancel (``IOC'') under Rule 11.6(q)(1) with BZX Rule 11.9(b)(1) and 
EDGX Rule 11.6(q)(1) to make clear that an order with an IOC 
instruction that does not include a Book Only instruction and that 
cannot be executed in accordance with Rule 11.10(a)(4) on the System 
when reaching the Exchange will be eligible for routing away pursuant 
to Rule 11.11.\38\ Under current rules, the TIF of IOC indicates that 
an order is to be executed in whole or in part as soon as such order is 
received and the portion not executed is to be cancelled. Based on BZX 
Rule 11.9(b)(1) and EDGX Rule 11.6(q)(1), the Exchange proposes to 
expand upon the description of IOC to specify that an order with such 
TIF may be routed away from the Exchange but that in no event will an 
order with such TIF be posted to the EDGA Book. Also like BZX and EDGX, 
the Exchange

[[Page 50697]]

notes that an order with an IOC instruction routed away from the 
Exchange are in turn routed with an IOC instruction.
---------------------------------------------------------------------------

    \38\ See supra note 14.
---------------------------------------------------------------------------

    Second, the Exchange proposes to amend the definition of the Fill-
or-Kill (``FOK'') under Rule 11.6(q)(3) to align with BZX Rule 
11.9(b)(6) and EDGX Rule 11.6(q)(3) to make clear that an order with a 
TIF instruction of FOK is not eligible for routing away pursuant to 
Rule 11.11.\39\ Although orders with a TIF of FOK are generally treated 
the same as order with a TIF of IOC, the Exchange does not permit 
routing of orders with an order with a TIF of FOK because the Exchange 
is unable to ensure the instruction of FOK (i.e., execution of an order 
in its entirety) through the routing process.
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

Rule 11.8, Order Types
    The Exchange proposes to amend the description of Limit Orders 
under Rule 11.8(b) to align such Rule with existing EDGX and BZX Rules. 
Each of these changes are described in more detail below.
    Limit Orders (Rule 11.8(b)). The Exchange proposes to amend Rule 
11.8(b) to: (i) Remove language from subparagraph (4) stating a Limit 
Order that includes both a Post Only instruction and Non-Displayed 
instruction will be rejected by the System; (ii) update the description 
of the inclusion of a Discretionary Range instruction on a Limit Order; 
(iii) amend subparagraph (10) to replace a reference to ``Displayed 
Price Sliding'' with ``Display-Price Sliding''; and (iv) amend 
subparagraph (12) to update the description of the re-pricing of orders 
with a Non-Displayed instruction.
    First, the Exchange proposes to remove from Rule 11.8(b)(4) 
language stating a Limit Order that includes both a Post Only 
instruction and Non-Displayed instruction will be rejected by the 
System. A similar prohibition against coupling a Post Only instruction 
and Non-Displayed instruction is not included in EDGX Rule 11.8(b)(4). 
Removing such language would enable the Exchange to further align its 
treatment of Limit Orders under Rule 11.8(b) with that of EDGX Rule 
11.8(b). Such change also updates Rule 11.8(b)(4) to reflect current 
system functionality. As proposed, Rule 11.8(b)(4) would no longer 
prohibit User from including both a Post Only instruction and Non-
Displayed instruction on their Limit Orders.
    Second, the Exchange proposes to re-locate within Rule 11.8(b) and 
re-word the statement regarding the inclusion of a Discretionary Range 
on a Limit Order. Current Rule 11.8(b)(8) currently states that a 
``User may include a Discretionary Range instruction.'' This ability to 
include a Discretionary Range instruction on a Limit Order is currently 
grouped with other functionality that can be elected for Limit Orders 
that also include a Post Only or Book Only instruction as well as 
specified time-in-force instructions for orders that can be entered 
into the System and post to the EDGA Book. However, the System does not 
allow the combination of a Discretionary Range and a Post Only 
instruction. Accordingly, the Exchange proposes to re-locate the 
reference to the Discretionary Range instruction within Rule 11.8(b) so 
that it is no longer grouped with other orders that can be combined 
with a Post Only instruction. The Exchange also proposes to state in 
Rule 11.8(b) that: (i) A Limit Order with a Discretionary Range 
instruction may also include a Book Only instruction; and (ii) a Limit 
Order with a Discretionary Range instruction and a Post Only 
instruction will be rejected. Further, the Exchange proposes to refer 
to the ability of a Limit Order to include a Discretionary Range 
instruction, rather than a ``User'' that may include a Discretionary 
Range instruction.
    Third, the Exchange proposes to replace a reference to ``Displayed 
Price Sliding'' with ``Display-Price Sliding''. This proposed rule 
change is designed to update Rule 11.8(b)(10) to reflect the proposed 
changes of references from ``Displayed Price Sliding'' to ``Display-
Price Sliding'' discussed above.
    Fourth, the Exchange proposes to amend Rule 11.8(b)(12) regarding 
the re-pricing of orders with a Non-Displayed instruction to align with 
to be identical to EDGX Rule 11.8(b)(12). The Exchange does not propose 
to modify the operation of the re-pricing of Limit Orders with a Non-
Displayed instruction. It simply seeks to replace the rule text with of 
Rule 11.8(b)(12) with text that is identical to EDGX Rule 11.8(b)(12). 
The re-pricing of Limit Orders with a Non-Displayed instruction 
operates in an identical manner as the re-pricing of non-displayed 
limit orders on EDGX. Replacing the rule text would enable the Exchange 
to include identical rule text describing processes that operate in an 
identical manner across EDGA and EDGX.
    MidPoint Peg Order Type (Rule 11.8(d)). The Exchange proposes amend 
Rule 11.8(d)(4) to correct a reference to the Pre-Opening Session. 
Currently, Rule 11.8(d)(4) states that MidPoint Peg Orders may be 
executed during Pre-Opening Sessions, Regular Trading Hours, Regular 
Session, and the Post-Closing Session. The Exchange proposes to amend 
Rule 11.8(d)(4) to state ``Pre-Opening Session'' rather than ``Pre-
Opening Sessions''.
Rule 11.9, Priority of Orders
    With respect to the Exchange's priority and execution algorithm, 
the Exchange is proposing various minor and structural to changes based 
on BZX Rule 11.12 and EDGX Rule 11.9 that are intended to emphasize the 
processes by which orders are accepted, priced, ranked, displayed and 
executed, as well as a new provision related to the ability of orders 
to rest at the Locking Price and the Exchange's handling of orders in 
such a circumstance. In addition to the changes proposed with respect 
to Rule 11.9, discussed immediately below, these changes also relate to 
Rules 11.10 and 11.11.
    The Exchange proposes modifications to Rule 11.9, Priority of 
Orders, to make clear that the ranking of orders described in such rule 
is in turn dependent on Exchange rules related to the execution of 
orders, primarily Rule 11.10. The Exchange believes that this has 
always been the case under Exchange rules but there was not previously 
a description of the cross-reference to Rule 11.10 within such rules. 
Accordingly, the Exchange proposes to add reference to the execution 
process in addition to the numeric cross-reference to Rule 11.10. The 
Exchange also proposes to change certain references within Rule 11.9 to 
refer to ranking rather than executing equally priced trading interest, 
as the Rule as a whole is intended to describe the manner in which 
resting orders are ranked and maintained, specifically in price and 
time priority, while awaiting execution against incoming orders. The 
Exchange does not believe that the proposed modifications substantively 
modify the operation of the rules but the Exchange believes that it is 
important to make clear that the ranking of orders is a separate 
process from the execution of orders. The Exchange also proposes 
changes to Rule 11.9(a)(4) and (a)(5) to specify that orders retain and 
lose ``time'' priority under certain circumstances as opposed to 
priority generally because retaining or losing price priority does not 
require the same descriptions, as price priority will always be 
retained unless the price of an order changes. Each change proposed 
above was recently approved with respect to analogous rules of BZX and

[[Page 50698]]

BYX, specifically amendments to Rule 11.12.\40\
---------------------------------------------------------------------------

    \40\ Id.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to amend Rule 11.9(a)(2)(B)(ii) to 
replace a reference to ``Displayed Price Sliding'' with ``Display-Price 
Sliding''. This proposed rule change is designed to update Rule 
11.9(a)(2)(B)(ii) to reflect the proposed change of references from 
``Displayed Price Sliding'' to ``Display-Price Sliding'' discussed 
above.
Rule 11.10, Order Execution
    The Exchange proposes to adopt paragraph (C) of Rule 11.10(a)(4), 
which would be identical to BZX Rule 11.13(a)(4)(C) \41\ and EDGX Rule 
11.10(a)(4). Proposed paragraph (C) would provide further clarity 
regarding the situations where orders are not executable, which 
although covered in other rules proposed above and in current 
rules,\42\ would focus on the incoming order on the same side of an 
order displayed on the EDGA Book rather than the resting order that is 
rendered not executable at a specified price because it is opposite 
such order displayed on the EDGA Book. Proposed paragraph (C) would 
state that, subject to proposed paragraph (D), described below, if an 
incoming order is on the same side of the market as an order displayed 
on the EDGA Book and upon entry would execute against contra-side 
interest at the same price as such displayed order, such incoming order 
will be cancelled or posted to the EDGA Book and ranked in accordance 
with Rule 11.9. The Exchange will suspend the ability of any order to 
execute at the price of a contra-side order with a Displayed 
instruction, as described above. The Exchange suspends this the ability 
of any order to execute in such situations to avoid an apparent 
priority issue. In particular, in such a situation the Exchange 
believes a User representing an order that is displayed on the Exchange 
might believe that an incoming order was received by the Exchange and 
then bypassed such displayed order, removing some other non-displayed 
liquidity on the same side of the market as such displayed order.
---------------------------------------------------------------------------

    \41\ Id.
    \42\ The Exchange notes that consistent with the proposed 
changes to Rules 11.6 and 11.8 described above, based on User 
instructions certain orders are permitted to post and rest on the 
EDGA Book at prices that lock contra-side liquidity, provided, 
however, that the System will never display a Locking Quotation. 
Similar behavior is also in place with respect to the Display-Price 
Sliding instruction under current rules.
---------------------------------------------------------------------------

    The Exchange also proposes to adopt Rule 11.10(a)(4)(D), which 
would be identical to BZX Rule 11.13(a)(4)(D).\43\ Proposed Rule 
11.10(a)(4)(D) would govern the price at which an order is executable 
when it is not displayed on the Exchange and there is a contra-side 
displayed order at such price. Specifically, for bids or offers equal 
to or greater than $1.00 per share, in the event that an incoming order 
is a Market Order or is a Limit Order priced more aggressively than an 
order displayed on the Exchange, the Exchange will execute the incoming 
order at, in the case of an incoming sell order, one-half minimum price 
variation less than the price of the displayed order, and, in the case 
of an incoming buy order, at one-half minimum price variation more than 
the price of the displayed order. As is true under existing 
functionality, this order handling is inapplicable for bids or offers 
under $1.00 per share.
---------------------------------------------------------------------------

    \43\ See supra note 14.
---------------------------------------------------------------------------

    To demonstrate the operation of this provision, again assume the 
NBBO is $10.10 by $10.11. Assume the Exchange has a posted and 
displayed bid to buy 100 shares of a security priced at $10.10 per 
share and a resting non-displayed bid to buy 100 shares of a security 
priced at $10.11 per share.
     Assume that the next order received by the Exchange is an 
order with a Post Only instruction to sell 100 shares of the security 
priced at $10.11 per share. The order with a Post Only instruction 
would not remove any liquidity upon entry pursuant to the Exchange's 
economic best interest functionality, would post to the EDGA Book and 
would be displayed at $10.11. The display of this order would, in turn, 
make the resting non-displayed bid not executable at $10.11.
     If an incoming offer to sell 100 shares at $10.10 is 
entered into the EDGA Book, the resting non-displayed bid originally 
priced at $10.11 will be executed at $10.105 per share, thus providing 
a half-penny of price improvement as compared to the order's limit 
price of $10.11. The execution at $10.105 per share also provides the 
incoming offer with a half-penny of price improvement as compared to 
its limit price of $10.10. The result would be the same for an incoming 
market order to sell or any other incoming limit order offer priced at 
$10.10 or below, which would execute against the non-displayed bid at a 
price of $10.105 per share. As above, an offer at the full price of the 
resting and displayed $10.11 offer would not execute against the 
resting non-displayed bid, but would instead either cancel or post to 
the EDGA Book behind the original $10.11 offer in priority.
    The Exchange notes that, in addition to the changes described 
above, it is proposing to add descriptive titles to paragraphs (A) and 
(B) of Rule 11.10(a)(4), which describe the process by which executable 
orders are matched within the System. Specifically, so long as it is 
otherwise executable, an incoming order to buy will be automatically 
executed to the extent that it is priced at an amount that equals or 
exceeds any order to sell in the EDGA Book and an incoming order to 
sell will be automatically executed to the extent that it is priced at 
an amount that equals or is less than any other order to buy in the 
EDGA Book. These rules further state that an order to buy shall be 
executed at the price(s) of the lowest order(s) to sell having priority 
in the EDGA Book and an order to sell shall be executed at the price(s) 
of the highest order(s) to buy having priority in the EDGA Book. The 
Exchange emphasizes these current rules only insofar as to highlight 
the interconnected nature of the priority rule. The Exchange also 
proposes to move language contained within Rule 11.10(a)(2) to 
paragraph (a) of the rule such that the language is more generally 
applicable to the rules governing execution contained in Rule 
11.10(a)(1) through (5). Specifically, the Exchange proposes to 
relocate language stating that any order falling within the parameters 
of the paragraph shall be referred to as ``executable'' and that an 
order will be cancelled back to the User, if based on market 
conditions, User instructions, applicable Exchange Rules and/or the Act 
and the rules and regulations thereunder, such order is not executable, 
cannot be routed to another Trading Center pursuant to Rule 11.11 or 
cannot be posted to the EDGA Book. Each change proposed above was 
recently approved with respect to analogous rules of BZX, specifically 
amendments to Rule 11.13.\44\
---------------------------------------------------------------------------

    \44\ Id.
---------------------------------------------------------------------------

Rule 11.11, Routing to Away Trading Centers
    The Exchange also proposes to modify paragraph (h) of Rule 11.11 to 
clarify the Exchange's rule regarding the priority of routed orders. 
Paragraph (h) currently sets forth the proposition that a routed order 
does not retain priority on the Exchange while it is being routed to 
other markets. The Exchange believes that its proposed clarification to 
paragraph (h) is appropriate because it more clearly states that a 
routed order is not ranked and maintained in the EDGA Book pursuant to 
Rule 11.9(a), and therefore is not available to execute against 
incoming orders pursuant to

[[Page 50699]]

Rule 11.10. The change proposed above was recently approved with 
respect to the analogous rule of BZX, specifically Rule 11.13, as 
amended.\45\
---------------------------------------------------------------------------

    \45\ Id.
---------------------------------------------------------------------------

Implementation Date
    The Exchange intends to implement the proposed rule change 
immediately.\46\
---------------------------------------------------------------------------

    \46\ Id.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act \47\ and further the objectives of Section 
6(b)(5) of the Act \48\ because they are 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, to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and, in general, to protect 
investors and the public interest. The proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \49\ of the Act 
in that it seeks to assure fair competition among brokers and dealers 
and among exchange markets.
---------------------------------------------------------------------------

    \47\ 15 U.S.C. 78f(b).
    \48\ 15 U.S.C. 78f(b)(5).
    \49\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    The proposed rule changes are generally intended to better align 
certain Exchange rules with those currently in place on EDGX, BZX, and 
BYX in order to provide a consistent rule set and functionality across 
the BGM Affiliated Exchanges. As noted above, the proposed changes will 
not result in any changes to the way the System operates due to the 
Exchange's current fee structure. However, by making the rule change, 
the Exchange will be in position to support such functionality 
immediately in the event the Exchange's fee structure changes in the 
future. Consistent functionality across the BGM Affiliated Exchanges 
will reduce complexity and streamline duplicative functionality, 
thereby resulting in simpler technology implementation, changes and 
maintenance by Users of the Exchange that are also participants on 
EDGX, BZX, and BYX. The proposed rule changes do not propose to 
implement new or unique functionality that has not been previously 
filed with the Commission or is not available on EDGX, BZX or BYX. The 
Exchange notes that the proposed rule text is based on applicable BZX 
and BYX rules and substantially similar to applicable EDGX rules; the 
proposed language of the Exchange's Rules differs from EDGX rules only 
to extent necessary to conform to existing Exchange rule text. Where 
possible, the Exchange has mirrored EDGX, BYX, or BZX rules, because 
consistent rules will simplify the regulatory requirements and increase 
the understanding of the Exchange's operations for Members of the 
Exchange that are also participants on EDGX, BZX, and BYX. 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.
    In addition to the specific rules discussed below, the Exchange 
also believes that the proposed amendments to clarify and re-structure 
the Exchange's priority, execution and routing rules will contribute to 
the protection of investors and the public interest by making the 
Exchange's rules easier to understand.
    Definitions (Rule 11.6). The modifications related to Discretionary 
Range, Pegged instructions, Re-Pricing, Aggressive, Super Aggressive, 
Post Only, as well as TIFs of IOC and FOK, are each designed to better 
align certain Exchange rules and system functionality with that 
currently offered by EDGX, BYX and BZX in order to provide a consistent 
functionality across the BGM Affiliated Exchanges. Specifically, the 
Exchange believes that the proposed rule changes will provide 
additional clarity and specificity regarding the functionality of the 
System and provide Users with consistent rules across the BGM 
Affiliated Exchanges, and thus would promote just and equitable 
principles of trade and remove impediments to a free and open market.
    In particular, the Exchange believes it is consistent with the Act 
to execute orders with a Discretionary Range instruction and orders 
with a Super Aggressive instruction against marketable liquidity (i.e., 
order with a Post Only instruction) when an execution would not 
otherwise occur is consistent with both: (i) The Act, by facilitating 
executions, removing impediments and perfecting the mechanism of a free 
and open market and national market system; and (ii) a User's 
instructions, which have evidenced a willingness by the User to pay 
applicable execution fees and/or execute at more aggressive prices than 
they are currently ranked in favor of an execution.
    The Exchange also believes that the proposed changes to Rule 
11.6(l) are consistent with Section 6(b)(5) of the Act,\50\ as well as 
Rule 610 of Regulation NMS \51\ and Rule 201 of Regulation SHO.\52\ 
Rule 610(d) requires exchanges to establish, maintain, and enforce 
rules that require members reasonably to avoid ``[d]isplaying 
quotations that lock or cross any protected quotation in an NMS 
stock.'' \53\ Such rules must be ``reasonably designed to assure the 
reconciliation of locked or crossed quotations in an NMS stock,'' and 
must ``prohibit . . . members from engaging in a pattern or practice of 
displaying quotations that lock or cross any quotation in an NMS 
stock.'' \54\ These changes will provide additional specificity within 
the Exchange's rules regarding the operation of the Exchange's re-
pricing options The proposed rule change will also align the 
descriptions of the Exchange's re-repricing options under Rule 11.6(l) 
with EDGX's re-pricing options under EDGX Rule 11.6(l) and BZX's price 
sliding processes described under BZX Rule 11.9(g).
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78f(b)(5).
    \51\ 17 CFR 242.610.
    \52\ 17 CFR 242.201.
    \53\ 17 CFR 242.610(d).
    \54\ Id.
---------------------------------------------------------------------------

    Order Types (Rule 11.8). The Exchange believes that the proposed 
changes to its order types under Rule 11.8 are consistent with Section 
6(b)(5) of the Act,\55\ because they are intended to align their 
operation with the operation of identical order types on EDGX and BZX, 
thereby fostering cooperation and coordination with persons engaged in 
facilitating transactions in securities and removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system.
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes its proposed amendments to the description of 
Limit Orders under Rule 11.8(b) is reasonable because it aligns their 
operation with existing EDGX and BZX rules and functionality as well as 
to reflect the relevant proposed changes discussed above. Therefore, 
the proposed rule change promotes just and equitable principles of 
trade because it will avoid investor confusion by providing the 
identical default behavior across the Exchange, EDGA and BZX.
    Priority (Rule 11.9). The Exchange believes its proposed amendments 
to Rule 11.9 regarding the priority of orders promotes just and 
equitable principles of trade, remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system by 
providing Members, Users, and the

[[Page 50700]]

investing public with greater transparency regarding how the System 
operates. The Exchange believes that the proposed rule changes 
regarding order priority will continue to provide greater transparency 
and further clarity on how the various order types will be assigned 
priority under various scenarios, thereby assisting Members, Users and 
the investing public in understanding the manner in which the System 
may execute their orders.
    Order Execution (Rule 11.10). Proposed Rule 11.10(a)(4)(C), which 
would be identical to EDGX Rule 11.10(a)(4)(C) and BZX Rule 
11.13(a)(4)(C),\56\ is consistent with Rules 11.6 and 11.8, as proposed 
to be amended, and reflects the fact that the Exchange will suspend the 
ability of an order to execute at the Locking Price when there is a 
contra-side order with a Displayed instruction in order to avoid an 
apparent priority issue. In turn, the Exchange believes that adopting 
Rule 11.10(a)(4)(C) promotes just and equitable principles of trade, 
fosters cooperation and coordination with persons engaged in 
facilitating transactions in securities, and removes impediments to, 
and perfects the mechanism of, a free and open market and a national 
market system, both with respect to the functionality that prevents 
executions in such a circumstance and with respect to the addition of 
the rule text, because it makes clear to Users the operation of the 
Exchange in conjunction with the proposed changes to the System. The 
Exchange also believes its proposal to adopt Rule 11.10(a)(4)(D), which 
would be identical to EDGX Rule 11.10(a)(4)(D) and BZX Rule 
11.13(a)(4)(D),\57\ promotes just and equitable principles of trade, 
fosters cooperation and coordination with persons engaged in 
facilitating transactions in securities, and removes impediments to, 
and perfects the mechanism of, a free and open market and a national 
market system. The proposed change is based on EDGX Rule 11.10(a)(4)(D) 
and BZX Rule 11.13(a)(4)(D) and sets forth how marketable orders that 
would otherwise not be executed under specific scenarios will be 
executed, thereby improving execution quality for participants sending 
orders to the Exchange. Further, the proposed change will help to 
provide price improvement to market participants, again, in scenarios 
that at times, such participants would potentially not receive 
executions on the Exchange. Thus, the Exchange believes that its 
proposed order handling process in the scenario described in this 
filing will benefit market participants and their customers by allowing 
them greater flexibility in their efforts to fill orders and minimize 
trading costs. The proposed rule change will also provide consistent 
handling for orders in such scenarios across the Exchange, EDGX, and 
BZX, thereby avoiding investor confusion and promoting just and 
equitable principles of trade.
---------------------------------------------------------------------------

    \56\ See supra note 14.
    \57\ Id.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposal will provide consistent functionality across 
the BGM Affiliated Exchanges, thereby reducing complexity and 
streamlining duplicative functionality, resulting in simpler technology 
implementation, changes and maintenance by Users of the Exchange that 
are also participants on EDGX, BYX and BZX. Thus, the Exchange believes 
this proposed rule change is necessary to permit fair competition among 
national securities exchanges. In addition, the Exchange believes the 
proposed rule change will benefit Exchange participants in that it is 
designed to achieve a consistent technology offering by the BGM 
Affiliated Exchanges.

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 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder.\58\
---------------------------------------------------------------------------

    \58\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. Waiver of the 30-day 
operative delay would allow the Exchange to harmonize its rules across 
BGM Affiliated Exchanges in a timely manner, thereby simplifying the 
rules available to Members of the Exchange that are also participants 
on EDGX, BZX and BYX. Based on the foregoing, the Commission believes 
the waiver of the operative delay is consistent with the protection of 
investors and the public interest.\59\ The Commission hereby grants the 
waiver and designates the proposal operative upon filing.
---------------------------------------------------------------------------

    \59\ 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).
---------------------------------------------------------------------------

    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. 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-EDGA-2015-33 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.


[[Page 50701]]


All submissions should refer to File Number SR-EDGA-2015-33. 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-2015-33 and should be 
submitted on or before September 10, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\60\
---------------------------------------------------------------------------

    \60\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-20544 Filed 8-19-15; 8:45 am]
BILLING CODE P