Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.9, 5639-5642 [2011-2131]
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Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–2132 Filed 1–31–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–EDGX–2011–01 on the
subject line.
[Release No. 34–63778; File No. SR–EDGA–
2011–01]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 11.9
January 26, 2011.
Paper Comments
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
21, 2011, the EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
All submissions should refer to File
(‘‘Commission’’) the proposed rule
change as described in Items I and II
Number SR–EDGX–2011–01. This file
below, which Items have been prepared
number should be included on the
subject line if e-mail is used. To help the by the Exchange. The Exchange has
designated the proposed rule change as
Commission process and review your
constituting a non-controversial rule
comments more efficiently, please use
only one method. The Commission will change under Rule 19b–4(f)(6) under the
3
post all comments on the Commission’s Act, which renders the proposal
effective upon filing with the
Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all Commission. The Commission is
publishing this notice to solicit
subsequent amendments, all written
statements with respect to the proposed comments on the proposed rule change
from interested persons.
rule change that are filed with the
I. Self-Regulatory Organization’s
Commission, and all written
Statement of the Terms of the Substance
communications relating to the
of the Proposed Rule Change
proposed rule change between the
Commission and any person, other than
The Exchange proposes to amend
those that may be withheld from the
Rule 11.9 to add its routing options,
public in accordance with the
which are currently contained in its fee
provisions of 5 U.S.C. 552, will be
schedule, to the rule and to introduce
available for Web site viewing and
additional options to the rule. The text
printing in the Commission’s Public
of the proposed rule change is attached
Reference Room, 100 F Street, NE.,
as Exhibit 5 and is available on the
Exchange’s Web site at https://
Washington, DC 20549, on official
www.directedge.com, at the Exchange’s
business days between the hours of 10
principal office, and at the Public
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and Reference Room of the Commission.
copying at the principal office of the
II. Self-Regulatory Organization’s
Exchange. All comments received will
Statement of the Purpose of, and
be posted without change; the
Statutory Basis for, the Proposed Rule
Commission does not edit personal
Change
identifying information from
In its filing with the Commission, the
submissions. You should submit only
Exchange included statements
information that you wish to make
concerning the purpose of, and basis for,
publicly available. All submissions
the proposed rule change and discussed
should refer to File Number SR–EDGX–
2011–01 and should be submitted on or
11 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
before February 22, 2011.
srobinson on DSKHWCL6B1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
2 17
3 17
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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
self-regulatory organization 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 Exchange’s current fee schedule
contains a list of routing options. The
Exchange proposes to move the current
list of routing options from the fee
schedule and codify it in Rule
11.9(a)(3). In addition, the Exchange
proposes to amend the existing routing
option descriptions to provide
additional clarity and introduce
additional routing options to Rule
11.9(a)(3).
The Exchange intends to implement
the rule change upon filing with the
Commission with respect to all routing
options, except ROOC, which the
Exchange intends to implement on or
about February 14, 2011.
First, the Exchange proposes to move
its discussion of available routing
options, which is located at the end of
the fee schedule, and codify it in Rule
11.9(b)(3)(a)–(s).
Currently, the fee schedule has the
following descriptions of routing
strategies:
ROUQ ............
ROUC ............
ROUD ............
ROUE .............
ROUZ .............
INET ...............
CFR 240.19b–4.
CFR 240.19b–4(f)(6).
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5639
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01FEN1
sweeps the EDGA book,
then routes to other destination centers.
sweeps the EDGA book,
then sequentially sweeps
the balance, if any, to the
following destinations:
other destination centers,
then Nasdaq OMX BX,
NYSE, and the remainder
posts to EDGX.
sweeps the EDGA book before being routed to other
destination centers.
sweeps the EDGA book,
then other destination centers, and any remainder
routes to other market
centers.
sweeps the EDGA book before interacting with solicited orders on a price/time
priority basis.
sweeps the EDGA book and
removes liquidity from
Nasdaq, if the order is
marketable, or posts on
Nasdaq, if the order is
non-marketable.
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Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices
ROBA .............
ROBX .............
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ROBY .............
sweeps the EDGA book and
routes to BATS BZX Exchange as an immediate
or cancel (IOC) order, with
the remainder being cancelled if there is no execution.
sweeps the EDGA book and
routes to Nasdaq BX Exchange as an immediate
or cancel (IOC) order, with
the remainder being cancelled if there is no execution.
sweeps the EDGA book and
routes to BATS BYX Exchange as an immediate
or cancel (IOC) order, with
the remainder being cancelled if there is no execution.
The Exchange proposes to amend
Rule 11.9(b)(2) to cross-reference the
routing options listed in proposed Rule
11.9(b)(3), as described in more detail
below.
The Exchange proposes to describe
how its routing options work in Rule
11.9(b)(3). The Exchange’s system
(‘‘System’’) provides a variety of routing
options. Routing options may be
combined with all available order types
and times-in-force, with the exception
of order types and times-in-force whose
terms are inconsistent with the terms of
a particular routing option. The System
will consider the quotations only of
accessible markets. The term ‘‘System
routing table’’ refers to the proprietary
process for determining the specific
trading venues to which the System
routes orders and the order in which it
routes them. The Exchange reserves the
right to maintain a different System
routing table for different routing
options and to modify the System
routing table at any time without notice.
The System routing options are
described in more detail below.
The ROUC strategy currently states
that under this strategy an order sweeps
the book then sequentially sweeps the
balance, if any, to the following
destinations: Other destination centers,
then Nasdaq OMX BX, NYSE, and the
remainder posts to EDGX. The Exchange
proposes to amend the description to
state that it is a routing option under
which an order checks the System for
available shares, and then is sent
sequentially to destinations on the
System routing table, Nasdaq OMX BX,
and NYSE. If shares remain unexecuted
after routing, they are posted on the
EDGX Exchange (‘‘EDGX’’) book. The
Exchange will place this proposed
description in Rule 11.9(b)(3)(a).
The ROUD strategy description states
that it sweeps the book before being
routed to other destination centers. The
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Exchange proposes to revise this
description to state that an order routed
under this strategy checks the System
for available shares and then is sent
sequentially to destinations on the
System routing table. The ROUE routing
strategy currently states that it sweeps
the book, then other destination centers,
and any remainder routes to other
market centers. The Exchange proposes
to revise this description to state that it
checks the System for available shares,
and then is sent to destinations on the
System routing table. The revised
descriptions of the ROUD and ROUE
routing strategies, as described above,
will be placed in proposed Rules
11.9(b)(3)(b)–(c).
The INET strategy is currently
described as a strategy that sweeps the
EDGA book and removes liquidity from
Nasdaq, if the order is marketable, or
posts on Nasdaq, if the order is nonmarketable. The Exchange proposes to
revise the description to read that ‘‘such
an order checks the System for available
shares and then is sent to Nasdaq. If
shares remain unexecuted after routing,
they are posted on Nasdaq book.’’ The
proposed description of the INET
routing strategy, as described above,
will be placed in proposed Rule
11.9(b)(3)(d).
The Exchange’s current description of
the ROBA strategy states that it is a
strategy under which an order sweeps
the book and routes to BATS BZX
Exchange as an immediate or cancel
(IOC) order, with the remainder being
cancelled if there is no execution. The
Exchange proposes to revise such
description to read that such order
checks the System for available shares
and then is sent to BATS BZX Exchange
as an IOC order. If shares remain
unexecuted after routing, they are
cancelled. The proposed description
will be placed in Rule 11.9(b)(3)(e).
ROBX is currently described as a
strategy under which an order sweeps
the book and routes to Nasdaq BX
Exchange as an IOC order, with the
remainder being cancelled if there is no
execution. This description is proposed
to be revised to read that such order
‘‘checks the System for available shares
and then is sent to Nasdaq BX Exchange
as an immediate or cancel (IOC) order.
If shares remain unexecuted after
routing, they are cancelled.’’
ROBY is currently described as a
strategy under which an order sweeps
the EDGA book and routes to BATS
BYX Exchange as an immediate or
cancel (IOC) order, with the remainder
being cancelled if there is no execution.
This description is proposed to be
revised to state that such order ‘‘checks
the System for available shares and then
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is sent to BATS BYX Exchange as an
IOC order. If shares remain unexecuted
after routing, they are cancelled.’’ The
revised descriptions of the ROBX and
ROBY strategies are proposed to be
placed in Rules 11.9(b)(3)(f)–(g).
The Exchange proposes to codify the
following strategies in Rule
11.9(b)(3)(h)–(s) as well:
In proposed rule 11.9(b)(3)(h), the
Exchange proposes to describe the
ROUT routing option as a routing option
under which an order checks the
System for available shares and then is
sent to destinations on the System
routing table.
In proposed rule 11.9(b)(3)(i), the
Exchange proposes to describe the
ROUX routing option under which an
order checks the System for available
shares and then is sent to destinations
on the System routing table.
In proposed rule 11.9(b)(3)(j), the
Exchange proposes to describe the
RDOT routing option as a routing option
under which an order checks the
System for available shares and then is
sent sequentially to destinations on the
System routing table. If shares remain
unexecuted after routing, they are sent
to the NYSE.
In proposed rule 11.9(b)(3)(k), the
Exchange proposes to describe the
RDOX routing option under which an
order checks the System for available
shares, and then is sent to the NYSE.
In proposed rule 11.9(b)(3)(l), the
Exchange proposes to describe the
ROLF routing option under which an
order checks the System for available
shares, and then is sent to LavaFlow
ECN.
In proposed rule 11.9(b)(3)(m), the
Exchange proposes to describe the
ROPA routing option under which an
order checks the System for available
shares and then is sent to NYSE Arca as
an immediate or cancel order (IOC). If
shares remain unexecuted after routing,
they are cancelled.
In proposed rule 11.9(b)(3)(n), the
Exchange proposes to describe the IOCX
routing option under which an order
checks the System for available shares
and then is sent to EDGX.
In proposed rule 11.9(b)(3)(o), the
Exchange proposes to describe the IOCT
routing option under which an order
checks the System for available shares
and then is sent sequentially to
destinations on the System routing
table. If shares remain unexecuted after
routing, they are sent to EDGX.
In proposed rule 11.9(b)(3)(p), the
Exchange proposes to describe the
ROOC routing option for orders that the
entering firm wishes to designate for
participation in the opening or closing
process of a primary listing market
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Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices
srobinson on DSKHWCL6B1PROD with NOTICES
(NYSE, Nasdaq, NYSE Amex, or NYSE
Arca) if received before the opening/
closing time of such market. If shares
remain unexecuted after attempting to
execute in the opening or closing
process, they are either posted to the
book, executed, or routed like a ROUT
routing option, as described in proposed
Rule 11.9(b)(3)(h), above.
The Exchange also proposes to
introduce the SWPA and SWPB routing
strategies and add them to proposed
Rules 11.9(b)(3)(q)–(r). Under the SWPA
strategy, an order would check the
System for available shares and then
would be sent to Protected Quotations
and only for displayed size. Under this
strategy, orders would not have to
contain sufficient size to execute against
all Protected Quotations (emphasis
added). If any shares remain
unexecuted, such remainder will be
cancelled back to the User. Under the
SWPB routing strategy, an order would
check the System for available shares
and then is sent to Protected Quotations
and only for displayed size. Under this
strategy, orders would have to contain
sufficient size to execute against all
Protected Quotations. The entire SWPB
order will be cancelled back to the User
immediately if at the time of entry there
is insufficient quantity in the SWPB
order to fulfill the displayed size of all
Protected Quotations. The Exchange
believes that the proposed introduction
of the SWPA/B routing options will
provide market participants with greater
flexibility in routing orders consistent
with Regulation NMS. This proposed
rule change is similar to NASDAQ Rule
4758(a)(1)(A)(vi) (NASDAQ’s ‘‘MOPP’’
strategy) and BATS Exchange, Inc. Rule
11.13(a)(3)(D) (‘‘Parallel T’’).4
The Exchange also proposes to
describe the IOCM routing option and
add it to Rule 11.9(b)(3)(s).
IOCM is a routing strategy under
which an order checks the System for
available shares and then is sent to
EDGX as an immediate or cancel (IOC)
Mid-Point Match (‘‘MPM’’) order.5 If
there is no liquidity at EDGX to execute
at the midpoint, the order is
subsequently cancelled.
In addition, the Exchange also
believes that the proposed introduction
of the routing options, described above,
will provide market participants with
4 See, e.g., NASDAQ Rule 4758, BATS Rule
11.13(a)(3)(D).
5 EDGX Rule 11.5(c)(7) defines a Mid-Point Match
(MPM) order as an order with an instruction to
execute it at the midpoint of the NBBO. A MPM
order may be a Day Order, Fill-or-Kill Order, or IOC
Order. The Exchange notes that members can send
in a MPM order directly to EDGX Exchange, Inc.
(‘‘EDGX’’) without routing through the EDGA
platform as an IOCM routing option.
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greater flexibility in routing orders,
without having to develop their own
complicated routing strategies.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b)(5) of the Act,6 which
requires the rules of an exchange to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest. The
proposed change to introduce the
routing options described above will
provide market participants with greater
flexibility in routing orders without
developing complicated order routing
strategies on their own. In addition, it
will provide additional clarity and
specificity to the Exchange’s rules
regarding routing strategies and will
further enhance transparency with
respect to Exchange routing offerings.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments Regarding 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
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms does not become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) 7 of the Act and Rule
19b–4(f)(6) thereunder.8
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
6 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f)(6).
7 15
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5641
of filing.9 However, Rule 19b–4(f)
(6)(iii) 10 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 requested that the
Commission waive the 30-day operative
delay. The Exchange notes that waiver
of this requirement will allow the
Exchange to immediately offer Exchange
Users new routing strategies, and with
respect to the ROOC option, as soon as
the technology for such strategy is
completed. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because such waiver would allow the
new routing strategies to become
immediately available, and, with respect
to the ROOC option, available on or
about February 14, 2011, and would
immediately provide additional clarity
and specificity to the Exchange’s rules
regarding routing strategies and further
enhance transparency with respect to
Exchange routing offerings. For this
reason, the Commission designates the
proposed rule change to be operative
upon filing with the Commission.11
At any time within 60 days of the
filing of such 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:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–EDGA–2011–01 on the
subject line.
9 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
10 Id.
11 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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5642
Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63771; File No. SR–ISE–
2011–06]
srobinson on DSKHWCL6B1PROD with NOTICES
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
All submissions should refer to File
Effectiveness of Proposed Rule
Number SR–EDGA–2011–01. This file
Change Regarding the Listing of
number should be included on the
subject line if e-mail is used. To help the Option Series With $1 Strike Prices
Commission process and review your
January 25, 2011.
comments more efficiently, please use
Pursuant to Section 19(b)(1) of the
only one method. The Commission will Securities Exchange Act of 1934
post all comments on the Commission’s (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on January
Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all 14, 2011, the International Securities
Exchange, LLC (‘‘ISE’’ or the ‘‘Exchange’’)
subsequent amendments, all written
statements with respect to the proposed filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
rule change that are filed with the
the proposed rule change as described
Commission, and all written
in Items I and II below, which Items
communications relating to the
have been prepared by the Exchange.
proposed rule change between the
Commission and any person, other than The Commission is publishing this
notice to solicit comments on the
those that may be withheld from the
proposed rule change from interested
public in accordance with the
persons.
provisions of 5 U.S.C. 552, will be
I. Self-Regulatory Organization’s
available for Web site viewing and
Statement of the Terms of Substance of
printing in the Commission’s Public
the Proposed Rule Change
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
The Exchange proposes to amend its
business days between the hours of 10
rules regarding the listing of $1 strike
prices. The text of the proposed rule
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and change is available on the Exchange’s
Web site https://www.ise.com, at the
copying at the principal office of the
principal office of the Exchange, on the
Exchange. All comments received will
Commission’s Web site at https://
be posted without change; the
www.sec.gov, and at the Commission’s
Commission does not edit personal
Public Reference Room.
identifying information from
submissions. You should submit only
II. Self-Regulatory Organization’s
information that you wish to make
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
publicly available. All submissions
should refer to File Number SR–EDGA– Change
2011–01 and should be submitted on or
In its filing with the Commission, the
before February 22, 2011.
self-regulatory organization included
statements concerning the purpose of,
For the Commission, by the Division of
and basis for, the proposed rule change
Trading and Markets, pursuant to delegated
and discussed any comments it received
authority.12
on the proposed rule change. The text
Elizabeth M. Murphy,
of these statements may be examined at
Secretary.
the places specified in Item IV below.
[FR Doc. 2011–2131 Filed 1–31–11; 8:45 am]
The self-regulatory organization has
BILLING CODE 8011–01–P
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 Exchange proposes to amend
Supplementary Material .01 to ISE Rule
1 15
12 17
CFR 200.30–3(a)(12).
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15:05 Jan 31, 2011
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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504 to improve the operation of the $1
Strike Program. Currently, the $1 Strike
Program only allows the listing of new
$1 strikes within $5 of the previous
day’s closing price. In certain
circumstances this has led to situations
where there are no at-the-money $1
strikes for a day, despite significant
demand. For instance, on November 15,
2010, the underlying shares of Isilon
Systems Inc. opened at $33.83. It had
closed the previous trading day at
$26.29. Options were available in $1
intervals up to $31, but because of the
restriction to only listing within $5 of
the previous close, the Exchange was
not able to add $32, $33, $34, $36, $37
or $38 strikes during the day.
The Exchange proposes that $1
interval strike prices be allowed to be
added immediately within $5 of the
official opening price in the primary
listing market. Thus, on any day, $1
Strike Program strikes may be added
within $5 of either the opening price or
the previous day’s closing price.
On occasion, the price movement in
the underlying security has been so
great that listing within $5 of either the
previous day’s closing price or the day’s
opening price will leave a gap in the
continuity of strike prices. For instance,
if an issue closes at $14 one day, and the
next day opens above $27, the $21 and
$22 strikes will be more than $5 from
either benchmark. The Exchange
proposes that any such discontinuity be
avoided by allowing the listing of all $1
Strike Program strikes between the
closing price and the opening price.
Additionally, issues that are in the $1
Strike Program may currently have
$2.50 interval strike prices added that
are more than $5 from the underlying
price or are more than a nine months to
expiration (long-term options series). In
such cases, the listing of a $2.50 interval
strike may lead to discontinuities in
strike prices and also a lack of parallel
strikes in different expiration months of
the same issue. For instance, under the
current rules, the Exchange may list a
$12.50 strike in a $1 Strike Program
issue where the underlying price is $24.
This allowance was provided to avoid
too large of an interval between the
standard strike prices of $10 and $15.
The unintended consequence, however,
is that if the underlying price should
decline to $16, the Exchange would not
be able to list a $12 or $13 strike. If the
underlying stayed near this level at
expiration, a new expiration month
would have the $12 and $13 strike but
not the $12.50, leading to a disparity in
strike intervals in different months of
the same option class. This has also led
to investor confusion, as they regularly
request the addition of inappropriate
E:\FR\FM\01FEN1.SGM
01FEN1
]]>Agencies
[Federal Register Volume 76, Number 21 (Tuesday, February 1, 2011)]
[Notices]
[Pages 5639-5642]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2131]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63778; File No. SR-EDGA-2011-01]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 11.9
January 26, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 21, 2011, the 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 the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) under the Act,\3\
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 11.9 to add its routing
options, which are currently contained in its fee schedule, to the rule
and to introduce additional options to the rule. The text of the
proposed rule change is attached as Exhibit 5 and is available on the
Exchange's Web site at https://www.directedge.com, at the Exchange's
principal office, and at the Public Reference Room of the Commission.
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 self-regulatory organization 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 Exchange's current fee schedule contains a list of routing
options. The Exchange proposes to move the current list of routing
options from the fee schedule and codify it in Rule 11.9(a)(3). In
addition, the Exchange proposes to amend the existing routing option
descriptions to provide additional clarity and introduce additional
routing options to Rule 11.9(a)(3).
The Exchange intends to implement the rule change upon filing with
the Commission with respect to all routing options, except ROOC, which
the Exchange intends to implement on or about February 14, 2011.
First, the Exchange proposes to move its discussion of available
routing options, which is located at the end of the fee schedule, and
codify it in Rule 11.9(b)(3)(a)-(s).
Currently, the fee schedule has the following descriptions of
routing strategies:
------------------------------------------------------------------------
------------------------------------------------------------------------
ROUQ................................... sweeps the EDGA book, then
routes to other destination
centers.
ROUC................................... sweeps the EDGA book, then
sequentially sweeps the
balance, if any, to the
following destinations: other
destination centers, then
Nasdaq OMX BX, NYSE, and the
remainder posts to EDGX.
ROUD................................... sweeps the EDGA book before
being routed to other
destination centers.
ROUE................................... sweeps the EDGA book, then
other destination centers, and
any remainder routes to other
market centers.
ROUZ................................... sweeps the EDGA book before
interacting with solicited
orders on a price/time
priority basis.
INET................................... sweeps the EDGA book and
removes liquidity from Nasdaq,
if the order is marketable, or
posts on Nasdaq, if the order
is non-marketable.
[[Page 5640]]
ROBA................................... sweeps the EDGA book and routes
to BATS BZX Exchange as an
immediate or cancel (IOC)
order, with the remainder
being cancelled if there is no
execution.
ROBX................................... sweeps the EDGA book and routes
to Nasdaq BX Exchange as an
immediate or cancel (IOC)
order, with the remainder
being cancelled if there is no
execution.
ROBY................................... sweeps the EDGA book and routes
to BATS BYX Exchange as an
immediate or cancel (IOC)
order, with the remainder
being cancelled if there is no
execution.
------------------------------------------------------------------------
The Exchange proposes to amend Rule 11.9(b)(2) to cross-reference
the routing options listed in proposed Rule 11.9(b)(3), as described in
more detail below.
The Exchange proposes to describe how its routing options work in
Rule 11.9(b)(3). The Exchange's system (``System'') provides a variety
of routing options. Routing options may be combined with all available
order types and times-in-force, with the exception of order types and
times-in-force whose terms are inconsistent with the terms of a
particular routing option. The System will consider the quotations only
of accessible markets. The term ``System routing table'' refers to the
proprietary process for determining the specific trading venues to
which the System routes orders and the order in which it routes them.
The Exchange reserves the right to maintain a different System routing
table for different routing options and to modify the System routing
table at any time without notice. The System routing options are
described in more detail below.
The ROUC strategy currently states that under this strategy an
order sweeps the book then sequentially sweeps the balance, if any, to
the following destinations: Other destination centers, then Nasdaq OMX
BX, NYSE, and the remainder posts to EDGX. The Exchange proposes to
amend the description to state that it is a routing option under which
an order checks the System for available shares, and then is sent
sequentially to destinations on the System routing table, Nasdaq OMX
BX, and NYSE. If shares remain unexecuted after routing, they are
posted on the EDGX Exchange (``EDGX'') book. The Exchange will place
this proposed description in Rule 11.9(b)(3)(a).
The ROUD strategy description states that it sweeps the book before
being routed to other destination centers. The Exchange proposes to
revise this description to state that an order routed under this
strategy checks the System for available shares and then is sent
sequentially to destinations on the System routing table. The ROUE
routing strategy currently states that it sweeps the book, then other
destination centers, and any remainder routes to other market centers.
The Exchange proposes to revise this description to state that it
checks the System for available shares, and then is sent to
destinations on the System routing table. The revised descriptions of
the ROUD and ROUE routing strategies, as described above, will be
placed in proposed Rules 11.9(b)(3)(b)-(c).
The INET strategy is currently described as a strategy that sweeps
the EDGA book and removes liquidity from Nasdaq, if the order is
marketable, or posts on Nasdaq, if the order is non-marketable. The
Exchange proposes to revise the description to read that ``such an
order checks the System for available shares and then is sent to
Nasdaq. If shares remain unexecuted after routing, they are posted on
Nasdaq book.'' The proposed description of the INET routing strategy,
as described above, will be placed in proposed Rule 11.9(b)(3)(d).
The Exchange's current description of the ROBA strategy states that
it is a strategy under which an order sweeps the book and routes to
BATS BZX Exchange as an immediate or cancel (IOC) order, with the
remainder being cancelled if there is no execution. The Exchange
proposes to revise such description to read that such order checks the
System for available shares and then is sent to BATS BZX Exchange as an
IOC order. If shares remain unexecuted after routing, they are
cancelled. The proposed description will be placed in Rule
11.9(b)(3)(e).
ROBX is currently described as a strategy under which an order
sweeps the book and routes to Nasdaq BX Exchange as an IOC order, with
the remainder being cancelled if there is no execution. This
description is proposed to be revised to read that such order ``checks
the System for available shares and then is sent to Nasdaq BX Exchange
as an immediate or cancel (IOC) order. If shares remain unexecuted
after routing, they are cancelled.''
ROBY is currently described as a strategy under which an order
sweeps the EDGA book and routes to BATS BYX Exchange as an immediate or
cancel (IOC) order, with the remainder being cancelled if there is no
execution. This description is proposed to be revised to state that
such order ``checks the System for available shares and then is sent to
BATS BYX Exchange as an IOC order. If shares remain unexecuted after
routing, they are cancelled.'' The revised descriptions of the ROBX and
ROBY strategies are proposed to be placed in Rules 11.9(b)(3)(f)-(g).
The Exchange proposes to codify the following strategies in Rule
11.9(b)(3)(h)-(s) as well:
In proposed rule 11.9(b)(3)(h), the Exchange proposes to describe
the ROUT routing option as a routing option under which an order checks
the System for available shares and then is sent to destinations on the
System routing table.
In proposed rule 11.9(b)(3)(i), the Exchange proposes to describe
the ROUX routing option under which an order checks the System for
available shares and then is sent to destinations on the System routing
table.
In proposed rule 11.9(b)(3)(j), the Exchange proposes to describe
the RDOT routing option as a routing option under which an order checks
the System for available shares and then is sent sequentially to
destinations on the System routing table. If shares remain unexecuted
after routing, they are sent to the NYSE.
In proposed rule 11.9(b)(3)(k), the Exchange proposes to describe
the RDOX routing option under which an order checks the System for
available shares, and then is sent to the NYSE.
In proposed rule 11.9(b)(3)(l), the Exchange proposes to describe
the ROLF routing option under which an order checks the System for
available shares, and then is sent to LavaFlow ECN.
In proposed rule 11.9(b)(3)(m), the Exchange proposes to describe
the ROPA routing option under which an order checks the System for
available shares and then is sent to NYSE Arca as an immediate or
cancel order (IOC). If shares remain unexecuted after routing, they are
cancelled.
In proposed rule 11.9(b)(3)(n), the Exchange proposes to describe
the IOCX routing option under which an order checks the System for
available shares and then is sent to EDGX.
In proposed rule 11.9(b)(3)(o), the Exchange proposes to describe
the IOCT routing option under which an order checks the System for
available shares and then is sent sequentially to destinations on the
System routing table. If shares remain unexecuted after routing, they
are sent to EDGX.
In proposed rule 11.9(b)(3)(p), the Exchange proposes to describe
the ROOC routing option for orders that the entering firm wishes to
designate for participation in the opening or closing process of a
primary listing market
[[Page 5641]]
(NYSE, Nasdaq, NYSE Amex, or NYSE Arca) if received before the opening/
closing time of such market. If shares remain unexecuted after
attempting to execute in the opening or closing process, they are
either posted to the book, executed, or routed like a ROUT routing
option, as described in proposed Rule 11.9(b)(3)(h), above.
The Exchange also proposes to introduce the SWPA and SWPB routing
strategies and add them to proposed Rules 11.9(b)(3)(q)-(r). Under the
SWPA strategy, an order would check the System for available shares and
then would be sent to Protected Quotations and only for displayed size.
Under this strategy, orders would not have to contain sufficient size
to execute against all Protected Quotations (emphasis added). If any
shares remain unexecuted, such remainder will be cancelled back to the
User. Under the SWPB routing strategy, an order would check the System
for available shares and then is sent to Protected Quotations and only
for displayed size. Under this strategy, orders would have to contain
sufficient size to execute against all Protected Quotations. The entire
SWPB order will be cancelled back to the User immediately if at the
time of entry there is insufficient quantity in the SWPB order to
fulfill the displayed size of all Protected Quotations. The Exchange
believes that the proposed introduction of the SWPA/B routing options
will provide market participants with greater flexibility in routing
orders consistent with Regulation NMS. This proposed rule change is
similar to NASDAQ Rule 4758(a)(1)(A)(vi) (NASDAQ's ``MOPP'' strategy)
and BATS Exchange, Inc. Rule 11.13(a)(3)(D) (``Parallel T'').\4\
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\4\ See, e.g., NASDAQ Rule 4758, BATS Rule 11.13(a)(3)(D).
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The Exchange also proposes to describe the IOCM routing option and
add it to Rule 11.9(b)(3)(s).
IOCM is a routing strategy under which an order checks the System
for available shares and then is sent to EDGX as an immediate or cancel
(IOC) Mid-Point Match (``MPM'') order.\5\ If there is no liquidity at
EDGX to execute at the midpoint, the order is subsequently cancelled.
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\5\ EDGX Rule 11.5(c)(7) defines a Mid-Point Match (MPM) order
as an order with an instruction to execute it at the midpoint of the
NBBO. A MPM order may be a Day Order, Fill-or-Kill Order, or IOC
Order. The Exchange notes that members can send in a MPM order
directly to EDGX Exchange, Inc. (``EDGX'') without routing through
the EDGA platform as an IOCM routing option.
---------------------------------------------------------------------------
In addition, the Exchange also believes that the proposed
introduction of the routing options, described above, will provide
market participants with greater flexibility in routing orders, without
having to develop their own complicated routing strategies.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act,\6\ which requires the rules of an
exchange to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest. The proposed change to introduce the routing options
described above will provide market participants with greater
flexibility in routing orders without developing complicated order
routing strategies on their own. In addition, it will provide
additional clarity and specificity to the Exchange's rules regarding
routing strategies and will further enhance transparency with respect
to Exchange routing offerings.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments Regarding 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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \7\ of the Act and Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\9\ However,
Rule 19b-4(f) (6)(iii) \10\ 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 requested that the
Commission waive the 30-day operative delay. The Exchange notes that
waiver of this requirement will allow the Exchange to immediately offer
Exchange Users new routing strategies, and with respect to the ROOC
option, as soon as the technology for such strategy is completed. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because such waiver would allow the new routing strategies to become
immediately available, and, with respect to the ROOC option, available
on or about February 14, 2011, and would immediately provide additional
clarity and specificity to the Exchange's rules regarding routing
strategies and further enhance transparency with respect to Exchange
routing offerings. For this reason, the Commission designates the
proposed rule change to be operative upon filing with the
Commission.\11\
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\9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
\10\ Id.
\11\ For the purposes only of waiving the 30-day operative
delay, the Commission has 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 such 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:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-EDGA-2011-01 on the subject line.
[[Page 5642]]
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGA-2011-01. This file
number should be included on the subject line if e-mail 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 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 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of the Exchange. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make publicly available. All submissions
should refer to File Number SR-EDGA-2011-01 and should be submitted on
or before February 22, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Elizabeth M. Murphy,
Secretary.
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\12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-2131 Filed 1-31-11; 8:45 am]
BILLING CODE 8011-01-P
