Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGA Exchange, Inc., 73925-73927 [2014-29107]
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Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices
process. This revision does not require
any changes to the ICC Clearing Rules.
According to ICC, it utilizes a ‘‘cross
and lock’’ algorithm as part of its price
discovery process. As described by ICC,
under this algorithm, bids and offers
derived from Clearing Participant
(‘‘CP’’) submissions are matched by
sorting them from highest to lowest and
lowest to highest levels, respectively.
This sorting process pairs the CP
submitting the highest bid price with
the CP submitting the lowest offer price,
the CP submitting the second highest
bid price with the CP submitting the
second-lowest offer price, and so on.
The algorithm then identifies crossed
and/or locked markets. Crossed markets
are the Clearing Participant pairs
generated by the sorting and ranking
process for which the bid price of one
Clearing Participant is above the offer
price of the matched Clearing
Participant. The algorithm identifies
locked markets, where the bid and the
offer are equal, in a similar fashion. The
mid-point of the first non-crossed, nonlocked matched market is, as stated by
ICC, the final end-of-day level (with
additional steps taken to remove offmarket submissions from influencing
the final level). According to ICC, this
process captures the market dynamics of
trading; however, final pricing levels are
ultimately determined by a single bid
and a single offer, which results in the
ability for one submission to influence
the outcome.
ICC proposes enhancements to its
methodology to improve the consistency
of prices and reduce the sensitivity of
the final level to a single Clearing
Participant’s submission. ICC states that
under the new ‘‘cross and lock’’
methodology, the average of the midpoints of all non-crossed, non-locked
matched markets that are less than or
equal to one bid-offer width is used as
the final level (with additional steps
taken to remove off-market submissions
from influencing the final level). ICC
states that, as a result, prices are less
sensitive to outlying submissions. ICC
also proposes additional language in the
ICC End-of-Day Price Discovery Policies
and Procedures to clarify existing
policies and practices, including, but
not limited to, language to clarify the
existing pricing methodology’s
treatment of identical crossed or locked
matched market bids or offers.
III. Discussion and Commission
Findings
Section 19(b)(2)(C) of the Act 4 directs
the Commission to approve a proposed
rule change of a self-regulatory
4 15
U.S.C. 78s(b)(2)(C).
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organization if the Commission finds
that such proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to such selfregulatory organization. Section
17A(b)(3)(F) of the Act 5 requires, among
other things, that the rules of a clearing
agency are designed to promote the
prompt and accurate clearance and
settlement of securities transactions
and, to the extent applicable, derivative
agreements, contracts, and transactions,
to assure the safeguarding of securities
and funds which are in the custody or
control of the clearing agency or for
which it is responsible and, in general,
to protect investors and the public
interest.
The Commission finds that the
proposed rule change is consistent with
Section 17A of the Act 6 and the rules
thereunder applicable to ICC. The
revised ICC End-of-Day Price Discovery
Policies and Procedures will reduce the
sensitivity of the final price level to a
single Clearing Participant’s submission,
resulting in more consistent day-overday end-of-day levels. The proposed
rule change is therefore reasonably
expected to provide a pricing
methodology to more accurately reflect
the market level. As such, the
Commission believes that the changes
will promote the prompt and accurate
settlement of securities and derivatives
transactions, and therefore are
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to ICC, in
particular, Section 17(A)(b)(3)(F).
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the Act 7
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (File No. SR–ICC–
2014–17) be, and hereby is, approved.9
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–29181 Filed 12–11–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73781; File No. SR–EDGA–
2014–31]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Fees for Use
of EDGA Exchange, Inc.
December 8, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
25, 2014, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the Exchange. The Exchange has
designated the proposed rule change as
one establishing or changing a member
due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act3 and Rule 19b–4(f)(2)
thereunder,4 which renders the
proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend the fee schedule applicable to
Members 5 of the Exchange pursuant to
EDGA Rules 15.1(a) and (c) (‘‘Fee
Schedule’’). Changes to the fee schedule
pursuant to this proposal are effective
upon filing.
The text of the proposed rule change
is available at the Exchange’s Web site
at https://www.directedge.com, at the
principal office of the Exchange, and at
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
5 The term ‘‘Member’’ is defined as ‘‘any
registered broker or dealer, or any person associated
with a registered broker or dealer, that has been
admitted to membership in the Exchange. A
Member will have the status of a ‘‘member’’ of the
Exchange as that term is defined in Section 3(a)(3)
of the Act.’’ See Exchange Rule 1.5(n).
1 15
5 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1.
7 15 U.S.C. 78q–1.
8 15 U.S.C. 78s(b)(2).
9 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
6 15
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Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices
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 the
Statutory Basis for, the Proposed Rule
Change
mstockstill on DSK4VPTVN1PROD with NOTICES
1. Purpose
The Exchange proposes to amend its
Fee Schedule to amend the first two
bullets regarding added and removal
flags under the General Notes section to
include Flags EA, ER, and 5, which
include in [sic] internalized volume.
The General Notes section of the Fee
Schedule includes two bullets that
contain the list of applicable ‘‘added
flags’’ and ‘‘removal flags’’ that may be
considered when calculating whether a
Member satisfied a certain pricing tier.
The Exchange appends Flags EA, ER,
and 5 to orders that inadvertently match
against each other and share the same
MPID (Member shares both sides of the
trade). The Exchange proposes to amend
the first bullet regarding added flags to
include Flag EA, which covers
internalized trades that add liquidity.
The Exchange also proposes to amend
the second bullet regarding removal
flags to include Flag ER, which covers
internalized trades that remove
liquidity. The Exchange believes that
Members orders that yield Flags EA, ER,
or 5 should be included in the
calculation of the Average Daily
Volume 6 (‘‘ADV’’) threshold as added
or removal flags for purposes of
determining whether a tier’s criteria has
been met.
Lastly, the Exchange proposes to
amend both the first and second bullets
6 ADV is defined in the Exchange’s Fee Schedule
‘‘as the average daily volume of shares that a
Member executed on, or routed by, the Exchange for
the month in which the fees are calculated. ADV
is calculated on a monthly basis, excluding shares
on any day that the Exchange’s system experiences
a disruption that lasts for more than 60 minutes
during Regular Trading Hours (‘Exchange System
Disruption’), on any day with a scheduled early
market close and on the last Friday in June (the
‘Russell Reconstitution Day’).’’
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to include Flag 5, which covers
internalized trades that add or remove
liquidity during the pre and post market
sessions. The Exchange also proposes to
add Footnote 13 to state that a Member’s
monthly volume attributed to Flag 5
will be divided evenly between the
added flags and removal flags when
determining whether that Member
satisfied a certain tier. The Exchange
proposes to divide a Member’s Flag 5
volume as such because the Exchange’s
systems cannot currently delineate
orders yielding Flag 5 that added from
those that removed liquidity for
purposes of determining whether a
Member satisfies a certain tier.
Implementation Date
The Exchange proposes to implement
these amendments to its Fee Schedule
on December 1, 2014.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,7
in general, and furthers the objectives of
Section 6(b)(4),8 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
other persons using its facilities. The
Exchange also notes that it operates in
a highly-competitive market in which
market participants can readily direct
order flow to competing venues if they
deem fee levels at a particular venue to
be excessive. The proposed rule change
reflects a competitive pricing structure
designed to incent market participants
to direct their order flow to the
Exchange. The Exchange believes that
the proposed rates are equitable and
non-discriminatory in that they apply
uniformly to all Members. The
Exchange believes the fees and credits
remain competitive with those charged
by other venues and therefore continue
to be reasonable and equitably allocated
to Members.
The Exchange believes that its
proposal to amend two bullets under the
General Notes section of the Fee
Schedule that contain the list of
applicable ‘‘added flags’’ and ‘‘removal
flags’’ are [sic] represents an equitable
allocation of reasonable dues, fees, and
other charges among Members and other
persons using its facilities. The
Exchange appends Flag EA, ER, and 5
to buy and sell orders that inadvertently
match against each other and share the
same MPID (Member shares both sides
of the trade). The Exchange also believes
proposed Footnote 13 stating that a
7 15
8 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(4).
Frm 00048
Fmt 4703
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Member’s monthly volume attributed to
Flag 5 will be divided evenly between
the added flags and removal flags when
determining whether that Member
satisfied a certain tier represents an
equitable allocation of reasonable dues,
fees, and other charges. The Exchange
proposes to divide a Member’s Flag 5
volume as such because Flag 5 includes
both added and removed liquidity
because the Exchange’s systems cannot
currently delineate orders yielding Flag
5 that added from those that removed
liquidity purposes of determining
whether a Member satisfies a certain
tier. The Exchange believes that
Members orders that yield Flags EA, ER,
or 5 should be included in the
calculation of the ADV threshold as
added or removal flags for purposes of
determining whether a tier’s criteria has
been met. Including such Flags would
be a reasonable means to encourage
Members to direct their orders to the
Exchange because they would have
certainty that certain orders will not be
excluded from their ADV calculations
because it inadvertently matched
against an order sharing the same MPID.
Lastly, the Exchange also believes that
the proposed amendment is nondiscriminatory because it applies
uniformly to all Members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
These proposed rule changes do not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange does not believe that any
of these changes represent a significant
departure from previous pricing offered
by the Exchange or pricing offered by
the Exchange’s competitors.
Additionally, Members may opt to
disfavor EDGA’s pricing if they believe
that alternatives offer them better value.
Accordingly, the Exchange does not
believe that the proposed changes will
impair the ability of Members or
competing venues to maintain their
competitive standing in the financial
markets.
The Exchange believes that adding
orders yielding Flags EA, ER, and 5 to
the ‘‘added flags’’ and ‘‘removal flags’’
would increase intermarket competition
because it would encourage Members to
direct their orders to the Exchange
because they would have certainty that
their orders will not be excluded from
their ADV calculations because it
inadvertently matched against an order
sharing the same MPID. The Exchange
believes that its proposal would neither
increase nor decrease intramarket
competition because the added and
removal flags would continue to apply
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Federal Register / Vol. 79, No. 239 / Friday, December 12, 2014 / Notices
uniformly to all Members and the ability
of some Members to meet the tiers
would only benefit other Members by
contributing to increased liquidity and
improve market quality at the Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and paragraph (f) of Rule
19b–4 thereunder.10 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
EDGA–2014–31 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–EDGA–2014–31. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–EDGA–
2014–31, and should be submitted on or
before January 2, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–29107 Filed 12–11–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73787; File No. SR–FICC–
2014–06]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Proposed Rule Change To
Amend the Rules of the Government
Securities Division and the MortgageBacked Securities Division on
Insolvency and Ceasing To Act
December 8, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1, and Rule 19b–4 thereunder,2
notice is hereby given that on November
25, 2014, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the clearing agency. The
Commission is publishing this notice to
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
9 15
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f).
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16:57 Dec 11, 2014
1 15
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73927
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to the rules of the
Government Securities Division (‘‘GSD
Rules’’) of FICC and the rules of the
Mortgage-Backed Securities Division
(‘‘MBSD Rules’’) of FICC (each of GSD
and MBSD, a ‘‘Division’’ of FICC) on
insolvency and ceasing to act that
simplify in certain respects FICC’s
process in a cease to act situation and
provide greater legal certainty for FICC
and its members, particularly in an
intra-day cease to act situation.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
FICC 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. FICC has prepared
summaries, set forth in sections A, B
and C below, of the most significant
aspects of such statements.
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The purpose of this filing is to amend
the GSD Rules and the MBSD Rules on
insolvency and ceasing to act in order
to simplify in certain respects FICC’s
process in a cease to act situation and
provide greater legal certainty for FICC
and its members, particularly in an
intra-day cease to act situation.
Background
In connection with lessons learned
from a recent close-out simulation
exercise conducted by The Depository
Trust & Clearing Corporation, FICC’s
parent company, in which FICC
participated, and related review of the
GSD Rules and the MBSD Rules, certain
potential challenges with administering
certain aspects of the GSD Rules and the
MBSD Rules on insolvency and ceasing
to act described below, particularly in
an intra-day cease to act situation, were
identified.
‘‘Time of Insolvency’’ and ‘‘Cut-Off
Time’’
Currently, GSD and MBSD include in
their insolvency rules (GSD Rule 22,
MBSD Rule 16) and cease to act rules
(GSD Rule 22A, MBSD Rule 17) the
E:\FR\FM\12DEN1.SGM
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Agencies
[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Notices]
[Pages 73925-73927]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29107]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73781; File No. SR-EDGA-2014-31]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of EDGA Exchange, Inc.
December 8, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 25, 2014, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act\3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ of the Exchange pursuant to EDGA Rules 15.1(a) and (c)
(``Fee Schedule''). Changes to the fee schedule pursuant to this
proposal are effective upon filing.
---------------------------------------------------------------------------
\5\ The term ``Member'' is defined as ``any registered broker or
dealer, or any person associated with a registered broker or dealer,
that has been admitted to membership in the Exchange. A Member will
have the status of a ``member'' of the Exchange as that term is
defined in Section 3(a)(3) of the Act.'' See Exchange Rule 1.5(n).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at https://www.directedge.com, at the principal office of the
Exchange, and at
[[Page 73926]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule to amend the first
two bullets regarding added and removal flags under the General Notes
section to include Flags EA, ER, and 5, which include in [sic]
internalized volume. The General Notes section of the Fee Schedule
includes two bullets that contain the list of applicable ``added
flags'' and ``removal flags'' that may be considered when calculating
whether a Member satisfied a certain pricing tier. The Exchange appends
Flags EA, ER, and 5 to orders that inadvertently match against each
other and share the same MPID (Member shares both sides of the trade).
The Exchange proposes to amend the first bullet regarding added flags
to include Flag EA, which covers internalized trades that add
liquidity. The Exchange also proposes to amend the second bullet
regarding removal flags to include Flag ER, which covers internalized
trades that remove liquidity. The Exchange believes that Members orders
that yield Flags EA, ER, or 5 should be included in the calculation of
the Average Daily Volume \6\ (``ADV'') threshold as added or removal
flags for purposes of determining whether a tier's criteria has been
met.
---------------------------------------------------------------------------
\6\ ADV is defined in the Exchange's Fee Schedule ``as the
average daily volume of shares that a Member executed on, or routed
by, the Exchange for the month in which the fees are calculated. ADV
is calculated on a monthly basis, excluding shares on any day that
the Exchange's system experiences a disruption that lasts for more
than 60 minutes during Regular Trading Hours (`Exchange System
Disruption'), on any day with a scheduled early market close and on
the last Friday in June (the `Russell Reconstitution Day').''
---------------------------------------------------------------------------
Lastly, the Exchange proposes to amend both the first and second
bullets to include Flag 5, which covers internalized trades that add or
remove liquidity during the pre and post market sessions. The Exchange
also proposes to add Footnote 13 to state that a Member's monthly
volume attributed to Flag 5 will be divided evenly between the added
flags and removal flags when determining whether that Member satisfied
a certain tier. The Exchange proposes to divide a Member's Flag 5
volume as such because the Exchange's systems cannot currently
delineate orders yielding Flag 5 that added from those that removed
liquidity for purposes of determining whether a Member satisfies a
certain tier.
Implementation Date
The Exchange proposes to implement these amendments to its Fee
Schedule on December 1, 2014.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\7\ in general, and
furthers the objectives of Section 6(b)(4),\8\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and other persons using its
facilities. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive. The proposed rule change reflects a competitive
pricing structure designed to incent market participants to direct
their order flow to the Exchange. The Exchange believes that the
proposed rates are equitable and non-discriminatory in that they apply
uniformly to all Members. The Exchange believes the fees and credits
remain competitive with those charged by other venues and therefore
continue to be reasonable and equitably allocated to Members.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that its proposal to amend two bullets under
the General Notes section of the Fee Schedule that contain the list of
applicable ``added flags'' and ``removal flags'' are [sic] represents
an equitable allocation of reasonable dues, fees, and other charges
among Members and other persons using its facilities. The Exchange
appends Flag EA, ER, and 5 to buy and sell orders that inadvertently
match against each other and share the same MPID (Member shares both
sides of the trade). The Exchange also believes proposed Footnote 13
stating that a Member's monthly volume attributed to Flag 5 will be
divided evenly between the added flags and removal flags when
determining whether that Member satisfied a certain tier represents an
equitable allocation of reasonable dues, fees, and other charges. The
Exchange proposes to divide a Member's Flag 5 volume as such because
Flag 5 includes both added and removed liquidity because the Exchange's
systems cannot currently delineate orders yielding Flag 5 that added
from those that removed liquidity purposes of determining whether a
Member satisfies a certain tier. The Exchange believes that Members
orders that yield Flags EA, ER, or 5 should be included in the
calculation of the ADV threshold as added or removal flags for purposes
of determining whether a tier's criteria has been met. Including such
Flags would be a reasonable means to encourage Members to direct their
orders to the Exchange because they would have certainty that certain
orders will not be excluded from their ADV calculations because it
inadvertently matched against an order sharing the same MPID. Lastly,
the Exchange also believes that the proposed amendment is non-
discriminatory because it applies uniformly to all Members.
B. Self-Regulatory Organization's Statement on Burden on Competition
These proposed rule changes do not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The Exchange does not believe that any of these changes
represent a significant departure from previous pricing offered by the
Exchange or pricing offered by the Exchange's competitors.
Additionally, Members may opt to disfavor EDGA's pricing if they
believe that alternatives offer them better value. Accordingly, the
Exchange does not believe that the proposed changes will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets.
The Exchange believes that adding orders yielding Flags EA, ER, and
5 to the ``added flags'' and ``removal flags'' would increase
intermarket competition because it would encourage Members to direct
their orders to the Exchange because they would have certainty that
their orders will not be excluded from their ADV calculations because
it inadvertently matched against an order sharing the same MPID. The
Exchange believes that its proposal would neither increase nor decrease
intramarket competition because the added and removal flags would
continue to apply
[[Page 73927]]
uniformly to all Members and the ability of some Members to meet the
tiers would only benefit other Members by contributing to increased
liquidity and improve market quality at the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from Members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \9\ and paragraph (f) of Rule 19b-4
thereunder.\10\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-EDGA-2014-31 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGA-2014-31. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-EDGA-2014-31, and should be
submitted on or before January 2, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29107 Filed 12-11-14; 8:45 am]
BILLING CODE 8011-01-P