Self-Regulatory Organizations; EDGA Exchange, Inc.; Order Approving Proposed Rule Change To Amend the EDGA Fee Schedule To Impose Fees for Physical Ports Used To Connect to EDGA Exchange, 50020-50021 [2010-20102]
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Federal Register / Vol. 75, No. 157 / Monday, August 16, 2010 / Notices
unreasonably discriminate between
customers, issuers, brokers, or dealers
because the proposed physical port fees
do not distinguish among the type of
participant but rather are the same for
all Members and non-members. The
Commission also believes that EDGX
was subject to significant competitive
pressure to act equitably, fairly, and
reasonably in setting the physical port
fees, in light of the highly competitive
nature of the market for execution and
routing services.11
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–EDGX–2010–
06) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–20103 Filed 8–13–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62681; File No. SR–EDGA–
2010–06]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Order Approving
Proposed Rule Change To Amend the
EDGA Fee Schedule To Impose Fees
for Physical Ports Used To Connect to
EDGA Exchange
August 10, 2010.
I. Introduction
sroberts on DSKD5P82C1PROD with NOTICES
On July 1, 2010, the EDGA Exchange,
Inc. (‘‘EDGA’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend its fee schedule to
begin charging an annual fee to
Members and non-members for certain
physical ports used to connect to the
Exchange’s systems. The proposed rule
change was published for comment in
the Federal Register on July 9, 2010.3
The Commission received no comment
letters regarding the proposal. This
11 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (File No. SR–NYSEArca–2006–21).
12 15 U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 62436
(July 1, 2010), 75 FR 39600.
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18:51 Aug 13, 2010
Jkt 220001
III. Discussion
The Commission finds that the
proposed rule change is consistent with
II. Description of the Proposal
the requirements of the Act and the
The Exchange proposes to begin
rules and regulations thereunder
charging an annual fee to Members and
applicable to a national securities
non-members for physical ports used to exchange.6 Specifically, the
connect to the Exchange’s systems for
Commission finds that the proposal is
purposes that include order entry and
consistent with Section 6(b)(4) of the
the receipt of Exchange data. A physical Act,7 which requires the equitable
port is a port used by a Member or nonallocation of reasonable dues, fees and
member to connect into the Exchange at other charges among its members and
the data centers where Exchange servers other persons using its facilities, and
are located.4 Physical port connections
Section 6(b)(5) of the Act,8 which
requires, among other things, that the
can occur either through an external
rules of a national securities exchange
telecommunication circuit or a crossbe designed to promote just and
connection. Currently, Members and
equitable principles of trade, to remove
non-members have a number of
impediments to and perfect the
alternative methods available to them
mechanism of a free and open market
for connecting to the Exchange without
and a national market system and, in
the need to obtain an independent
general, to protect investors and the
physical connection, including the use
of financial extranets or service bureaus. public interest, and not be designed to
permit unfair discrimination between
The Exchange believes that some
Members and non-members may wish to customers, issuers, brokers, or dealers.
The Commission also finds that the
connect directly to the Exchange’s
proposed rule change is consistent with
systems with their own dedicated
Section 6(b)(8) of the Act,9 which
circuit connection. To support their
requires that the rules of an exchange
requirements and the associated
not impose a burden on competition not
infrastructure costs related to direct
necessary or appropriate in furtherance
circuit connectivity, EDGA proposes to
of the purpose of the Act. Finally, the
charge Members and non-members the
Commission finds that the proposed
following annual fees based on the
rule change is consistent with Rule
connectivity service type:
603(a) of Regulation NMS,10 which
Annual fee per requires an exclusive processor that
Connection service type
physical port
distributes information with respect to
quotations for or transactions in an NMS
1 Gb Copper .........................
$5,000 stock to do so on terms that are fair and
1 Gb Fiber ............................
7,500
reasonable and not unreasonably
10 Gb Fiber ..........................
10,000
discriminatory.
The Commission believes that the
Only one physical port is required to
proposed physical port fees are
access all services for EDGA. However,
equitably allocated among Members and
Members and non-members may choose non-members and do not unfairly or
more than one physical port and
unreasonably discriminate between
different connection service types based customers, issuers, brokers, or dealers
on their needs. The Exchange notes that because the proposed physical port fees
other market centers provide similar
do not distinguish among the type of
services to their Members and nonparticipant but rather are the same for
members.5
all Members and non-members. The
Commission also believes that EDGA
The Exchange believes that the
was subject to significant competitive
proposal will offer market participants
pressure to act equitably, fairly, and
additional EDGA connectivity choices,
reasonably in setting the physical port
providing for greater access to EDGA
fees, in light of the highly competitive
while allowing each market participant
nature of the market for execution and
to choose the method of connectivity
routing services.11
based on its specific needs.
order approves the proposed rule
change.
4 Non-members may include non-member service
bureaus that act as a conduit for orders entered by
Exchange Members that are their customers, as well
as sponsored participants and market data
recipients.
5 See Securities Exchange Act Release No. 61545
(February 19, 2010), 75 FR 8769 (February 25, 2010)
(order approving File No. SR–BATS–2009–032). See
also Securities Exchange Act Release No. 62392
(June 28, 2010), 75 FR 38857 (July 6, 2010) (notice
of filing of File No. SR–Nasdaq–2010–077).
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Fmt 4703
Sfmt 4703
6 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(4).
8 15 U.S.C. 78f(b)(5).
9 15 U.S.C. 78f(b)(8).
10 17 CFR 242.603(a).
11 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (File No. SR–NYSEArca–2006–21).
E:\FR\FM\16AUN1.SGM
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Federal Register / Vol. 75, No. 157 / Monday, August 16, 2010 / Notices
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–EDGA–2010–
06) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–20102 Filed 8–13–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62678; File No. SR–Phlx–
2010–108]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
NASDAQ OMX PHLX, Inc. Relating to a
Proposed Price Improvement System,
Price Improvement XL (PIXLSM)
August 10, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
notice is hereby given that on July 30,
2010, NASDAQ OMX PHLX, Inc.
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
sroberts on DSKD5P82C1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, pursuant to Section
19(b)(1) of the Act 3 and Rule 19b–4
thereunder,4 proposes to adopt new
Rule 1080(n), Price Improvement XL
(PIXLSM), to establish a priceimprovement mechanism on the
Exchange.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nasdaqtrader.com/
micro.aspx?id=PHLXRulefilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
12 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(1).
4 17 CFR 240.19b–4.
13 17
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18:51 Aug 13, 2010
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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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to establish a priceimprovement mechanism, PIXL, on the
Exchange, which includes auto-match
functionality in which a member (an
‘‘Initiating Member’’) may electronically
submit for execution an order it
represents as agent on behalf of a public
customer, broker dealer, or any other
entity (‘‘PIXL Order’’) against principal
interest or against any other order it
represents as agent (an ‘‘Initiating
Order’’) provided it submits the PIXL
Order for electronic execution into the
PIXL Auction (‘‘Auction’’) pursuant to
the proposed Rule.
Auction Eligibility Requirements
All options traded on the Exchange
are eligible for PIXL. Proposed Rule
1080(n)(i) describes the circumstances
under which an Initiating Member may
initiate an Auction.
If the PIXL Order is for the account of
a public customer and is for a size of 50
contracts or more, the Initiating Member
must stop the entire PIXL Order at a
price that is equal to or better than the
National Best Bid/Offer (‘‘NBBO’’) on the
opposite side of the market from the
PIXL Order, provided that such price
must be at least one minimum price
improvement increment (as determined
by the Exchange but not smaller than
one cent) better than any limit order on
the limit order book on the same side of
the market as the PIXL Order. The
purpose of this provision is to ensure
that public customer PIXL Orders for 50
contracts or more are guaranteed at least
the NBBO but do not trade ahead of
other limit orders already on the
Exchange’s limit order book at the
existing limit order’s limit price.
For example, assume the Exchange’s
disseminated market (the ‘‘PBBO’’) in
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Fmt 4703
Sfmt 4703
50021
the affected series is the NBBO and is
1.00 bid for 10 contracts, 1.01 offered for
20 contracts and the existing
disseminated 1.00 bid is a public
customer limit order. If an initiating
Member submits a public customer
PIXL Order to buy 100 contracts @ the
market together with a contra-side
Initiating Order to sell 100 contracts, the
entire PIXL Order must be stopped at a
price of 1.01 because the public
customer limit order on the limit order
book has time priority at 1.00 over the
public customer PIXL order.
If the PIXL Order is for the account of
a public customer and is for a size of
less than 50 contracts, the Initiating
Member must stop the entire PIXL
Order at a price that is the better of: (i)
The PBBO price on the opposite side of
the market from the PIXL Order
improved by at least one minimum
price improvement increment, or (ii) the
PIXL Order’s limit price (if the order is
a limit order), provided in either case
that such price is at or better than the
NBBO, and at least one minimum price
improvement increment better than any
limit order on the book on the same side
of the market as the PIXL Order. The
purpose of this provision is to ensure
that smaller PIXL Orders will be
guaranteed price improvement by
establishing a size under which a PIXL
Order must be submitted at a price
better than the PBBO. The Exchange
believes this should especially benefit
public customers.5 The provision
concerning PIXL Orders for a size of less
than 50 contracts will be effective for a
pilot period scheduled to expire August
31, 2011.6
For example, assume the PBBO in the
affected series is 1.00 bid—1.03 offer
and the NBBO is 1.00—1.03. If an
initiating Member submits a public
customer PIXL Order to buy 25
contracts @ the market together with a
contra-side Initiating Order to sell 25
contracts, the public customer PIXL
Order must be stopped at least one
minimum improvement increment
better than the PBBO offer of 1.03 to
guarantee price improvement.
Therefore, in this example, the PIXL
5 The Exchange notes that Chicago Board Options
Exchange, Inc. (‘‘CBOE’’) Rule 6.74A(a)(3) provides
that any AIM Agency Order (the equivalent of a
PIXL Order) for less than 50 contracts that is
entered into the CBOE’s Automated Improvement
Mechanism (‘‘AIM’’) is guaranteed an execution at
the NBBO price improved by one minimum price
improvement increment or at the AIM Agency
Order’s limit price (if the order is a limit order). See
Securities Exchange Act Release No. 53222
(February 3, 2006), 71 FR 7089 (February 10, 2006)
(SR–CBOE–2005–60).
6 The Exchange proposes the one-year pilot in
order to ascertain the level of price improvement
attained for such smaller-sized orders during the
pilot period.
E:\FR\FM\16AUN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 157 (Monday, August 16, 2010)]
[Notices]
[Pages 50020-50021]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20102]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62681; File No. SR-EDGA-2010-06]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Order
Approving Proposed Rule Change To Amend the EDGA Fee Schedule To Impose
Fees for Physical Ports Used To Connect to EDGA Exchange
August 10, 2010.
I. Introduction
On July 1, 2010, the EDGA Exchange, Inc. (``EDGA'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend its fee schedule to begin charging an annual fee to Members and
non-members for certain physical ports used to connect to the
Exchange's systems. The proposed rule change was published for comment
in the Federal Register on July 9, 2010.\3\ The Commission received no
comment letters regarding the proposal. This order approves the
proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62436 (July 1,
2010), 75 FR 39600.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to begin charging an annual fee to Members
and non-members for physical ports used to connect to the Exchange's
systems for purposes that include order entry and the receipt of
Exchange data. A physical port is a port used by a Member or non-member
to connect into the Exchange at the data centers where Exchange servers
are located.\4\ Physical port connections can occur either through an
external telecommunication circuit or a cross-connection. Currently,
Members and non-members have a number of alternative methods available
to them for connecting to the Exchange without the need to obtain an
independent physical connection, including the use of financial
extranets or service bureaus. The Exchange believes that some Members
and non-members may wish to connect directly to the Exchange's systems
with their own dedicated circuit connection. To support their
requirements and the associated infrastructure costs related to direct
circuit connectivity, EDGA proposes to charge Members and non-members
the following annual fees based on the connectivity service type:
---------------------------------------------------------------------------
\4\ Non-members may include non-member service bureaus that act
as a conduit for orders entered by Exchange Members that are their
customers, as well as sponsored participants and market data
recipients.
------------------------------------------------------------------------
Annual fee per
Connection service type physical port
------------------------------------------------------------------------
1 Gb Copper............................................. $5,000
1 Gb Fiber.............................................. 7,500
10 Gb Fiber............................................. 10,000
------------------------------------------------------------------------
Only one physical port is required to access all services for EDGA.
However, Members and non-members may choose more than one physical port
and different connection service types based on their needs. The
Exchange notes that other market centers provide similar services to
their Members and non-members.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 61545 (February 19,
2010), 75 FR 8769 (February 25, 2010) (order approving File No. SR-
BATS-2009-032). See also Securities Exchange Act Release No. 62392
(June 28, 2010), 75 FR 38857 (July 6, 2010) (notice of filing of
File No. SR-Nasdaq-2010-077).
---------------------------------------------------------------------------
The Exchange believes that the proposal will offer market
participants additional EDGA connectivity choices, providing for
greater access to EDGA while allowing each market participant to choose
the method of connectivity based on its specific needs.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\6\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(4) of the Act,\7\ which requires the equitable allocation
of reasonable dues, fees and other charges among its members and other
persons using its facilities, and Section 6(b)(5) of the Act,\8\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system and, in general, to protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. The
Commission also finds that the proposed rule change is consistent with
Section 6(b)(8) of the Act,\9\ which requires that the rules of an
exchange not impose a burden on competition not necessary or
appropriate in furtherance of the purpose of the Act. Finally, the
Commission finds that the proposed rule change is consistent with Rule
603(a) of Regulation NMS,\10\ which requires an exclusive processor
that distributes information with respect to quotations for or
transactions in an NMS stock to do so on terms that are fair and
reasonable and not unreasonably discriminatory.
---------------------------------------------------------------------------
\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(8).
\10\ 17 CFR 242.603(a).
---------------------------------------------------------------------------
The Commission believes that the proposed physical port fees are
equitably allocated among Members and non-members and do not unfairly
or unreasonably discriminate between customers, issuers, brokers, or
dealers because the proposed physical port fees do not distinguish
among the type of participant but rather are the same for all Members
and non-members. The Commission also believes that EDGA was subject to
significant competitive pressure to act equitably, fairly, and
reasonably in setting the physical port fees, in light of the highly
competitive nature of the market for execution and routing
services.\11\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (File No. SR-NYSEArca-2006-
21).
---------------------------------------------------------------------------
[[Page 50021]]
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-EDGA-2010-06) be, and hereby
is, approved.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20102 Filed 8-13-10; 8:45 am]
BILLING CODE 8010-01-P
