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]

Download as PDF 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 (http://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 (http://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 http:// 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 VerDate Mar<15>2010 15:05 Jan 31, 2011 Jkt 223001 PO 00000 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). Frm 00081 Fmt 4703 Sfmt 4703 5639 E:\FR\FM\01FEN1.SGM 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. 5640 Federal Register / Vol. 76, No. 21 / Tuesday, February 1, 2011 / Notices ROBA ............. ROBX ............. srobinson on DSKHWCL6B1PROD with NOTICES 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 VerDate Mar<15>2010 15:05 Jan 31, 2011 Jkt 223001 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 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 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 E:\FR\FM\01FEN1.SGM 01FEN1 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. VerDate Mar<15>2010 15:05 Jan 31, 2011 Jkt 223001 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 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 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 (http://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). E:\FR\FM\01FEN1.SGM 01FEN1 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 (http://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 http://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 http:// 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). VerDate Mar<15>2010 15:05 Jan 31, 2011 2 17 Jkt 223001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00084 Fmt 4703 Sfmt 4703 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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 http://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.
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    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).
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    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).
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    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 (http://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 (http://www.sec.gov/rules/sro.shtml). Copies 
of the submission, all subsequent amendments, all written statements 
with respect to the proposed rule change that are filed with the 
Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street, NE., Washington, 
DC 20549, on official business days between the hours of 10 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