Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the EDGA Exchange, Inc. Fee Schedule, 7225-7227 [2012-3095]

Download as PDF srobinson on DSK4SPTVN1PROD with NOTICES Federal Register / Vol. 77, No. 28 / Friday, February 10, 2012 / Notices access to the current portfolio composition of the Funds through the Funds’ Web site and/or at the Exchange’s Web site. In addition, the Commission notes that Standard & Poor’s is not a broker-dealer, is not affiliated with a broker-dealer, and has implemented procedures designed to prevent the use and dissemination of material, non-public information regarding the Index and Sub-Indexes. Lastly, the Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees, and trading of the Shares will be subject to NYSE Arca Equities Rule 8.200, Commentary .02(e), which sets forth certain restrictions on ETP Holders 26 acting as registered Market Makers 27 in Trust Issued Receipts to facilitate surveillance. The Exchange has represented that the Shares are deemed to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made representations, including: (1) The Funds will be subject to the criteria in NYSE Arca Equities Rule 8.200 and Commentary .02 thereto for initial and continued listing of the Shares. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (3) The Exchange’s surveillance procedures applicable to derivative products, including Trust Issued Receipts, are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. (4) The Exchange can obtain market surveillance information, including customer identity information, with respect to transactions occurring on the Futures Exchanges, all of which are members of the Intermarket Surveillance Group (‘‘ISG’’). For components traded on exchanges, not more than 10% of the weight of a Fund’s portfolio in the aggregate shall consist of components whose principal trading market is not a member of ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement. (5) Prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin 26 See NYSE Arca Equities Rule 1.1(n) (defining ETP Holder). 27 See NYSE Arca Equities Rule 1.1(u) (defining Market Maker). VerDate Mar<15>2010 21:29 Feb 09, 2012 Jkt 226001 of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (a) The risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated IOPV will not be calculated or publicly disseminated, as well as during the Core Trading Session when the IOPV may be based in part on static underlying values; (b) the procedures for purchases and redemptions of Shares in Creation Baskets and Redemption Baskets (and that Shares are not individually redeemable); (c) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (d) how information regarding the IOPV is disseminated; (e) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information. (6) The anticipated minimum number of Shares for each Fund to be outstanding at the start of trading will be 100,000 Shares. (7) For the initial and continued listing of the Shares, the Funds must be in compliance with NYSE Arca Equities Rule 5.3 and Rule 10A–3 under the Act.28 (8) The Exchange will obtain a representation (prior to listing the Shares of each Fund) from the Trust that the NAV per Share will be calculated daily and made available to all market participants at the same time. This approval order is based on the Exchange’s representations.29 For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act 30 and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,31 that the 28 17 CFR 240.10A–3. Commission notes that it does not regulate the market for futures in which the Fund plans to take positions, which is the responsibility of the Commodity Futures Trading Commission (‘‘CFTC’’). The CFTC has the authority to set limits on the positions that any person may take in futures. These limits may be directly set by the CFTC or by the markets on which the futures are traded. The Commission has no role in establishing position limits on futures, even though such limits could impact an exchange-traded product that is under the jurisdiction of the Commission. 30 15 U.S.C. 78f(b)(5). 31 15 U.S.C. 78s(b)(2). 29 The PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 7225 proposed rule change (SR–NYSEArca– 2011–94) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–3152 Filed 2–9–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66335; File No. SR–EDGA– 2012–03] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to the EDGA Exchange, Inc. Fee Schedule February 6, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 31, 2012, the EDGA Exchange, Inc. (the ‘‘Exchange’’ or the ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its fees and rebates applicable to Members 3 of the Exchange pursuant to EDGA Rule 15.1(a) and (c). All of the changes described herein are applicable to EDGA Members. The text of the proposed rule change is available on the Exchange’s Internet 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 self-regulatory organization included statements concerning the purpose of, 32 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 A Member is any registered broker or dealer, or any person associated with a registered broker or dealer, that has been admitted to membership in the Exchange. 1 15 E:\FR\FM\10FEN1.SGM 10FEN1 7226 Federal Register / Vol. 77, No. 28 / Friday, February 10, 2012 / Notices 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose srobinson on DSK4SPTVN1PROD with NOTICES In SR–EDGA–2011–40,4 the Exchange amended several routing options contained in Rule 11.9(b)(3) to allow Users 5 more discretion if shares remain unexecuted after routing. In particular, Rule 11.9(b)(3) was amended to provide that Users may elect that any remainder of an order be posted to the EDGX Exchange, Inc. (‘‘EDGX’’) for any of the routing options listed in the rule, except those listed.6 As a result of this amendment, the Exchange proposes to make a corresponding amendment to Flag P of its fee schedule. The subject amendment provides a rebate of $0.0027 per share for any order that after passing through EDGA and other destinations adds liquidity to EDGX (including during the Pre-Opening Session 7 and Post-Closing Sessions) 8 and yields Flag P. This would occur as a result of the Member’s order using any of the routing strategies listed in Rule 11.9(b)(3) where the residual of the order posts to EDGX.9 As a result of this change, the Exchange proposes to revise the description on the Flag P to broaden its applicability to several routing strategies, instead of just an EDGAoriginated ROUC routing strategy. The Flag P is thus proposed to state ‘‘Adds liquidity on EDGX, including pre & post market.’’ The Exchange proposes to implement this amendment to its fee schedule on February 1, 2012. 4 See Securities Exchange Act Release No. 66231 (January 24, 2012), 77 FR 4605 (January 30, 2012). 5 As defined in Rule 1.5(cc) [sic]. 6 Routing options listed in Rules 11.9(b)(3)(a) and (n)–(q) are not altered as a result of this amendment. The routing option in Rule 11.9(b)(3)(a) already posts to EDGX and no amendment to the rule was needed as no discretion is provided to the User. The routing options in Rules 11.9(b)(3)(n)–(q) do not have the option to post the remainder of an order to EDGX. 7 As defined in EDGA Rule 1.5(s). 8 As defined in EDGA Rule 1.5(r). 9 This includes all routing strategies in Rule 11.9(b)(3), except for (n)–(q), that do not have the option to post the remainder of an order to EDGX. VerDate Mar<15>2010 21:29 Feb 09, 2012 Jkt 226001 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,10 in general, and furthers the objectives of Section 6(b)(4),11 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Exchange believes that the rebate for Flag P of $0.0027 per share is an equitable allocation of reasonable dues, fees, and other charges. First, the rebate is designed to incentivize Members to route through EDGA using any of the applicable strategies listed in Rule 11.9(b)(3), as discussed above, to reach multiple sources of liquidity on EDGA before routing to other destinations, and thereby potentially increases volume on EDGA to the extent an order using any of these routing strategies executes on EDGA. The routing strategy allows Members to reach multiple sources of liquidity by routing order flow through EDGA rather than going directly to various venues. The rebate provides Members with a flat rate of $0.0027 per share rebate if the particular routing strategy posts to EDGX and is later executed. When the Exchange’s routing broker/dealer, Direct Edge ECN LLC d/b/a DE Route (‘‘DE Route’’) achieves certain tiers on EDGX using any of the applicable routing strategies in Rule 11.9(b)(3) that post residual on EDGX, it is able to pass through a better rebate than if it had not achieved a tier.12 For example, if the Member had routed to EDGX directly and the order had added liquidity to EDGX, the Member could receive rebates ranging from $0.0023– $0.0034, depending on if a volume threshold were satisfied. 13 The $0.0027 per share rebate thus represents a rate in between these various tiered and nontiered rebates provided for adding liquidity to EDGX. This allows EDGA Members to share in potential volume tier savings realized by DE Route when it achieves certain tiers. This type of rate is also similar to EDGA’s rate for removing liquidity from LavaFlow (Flag U). The standard removal rate of $0.0029 per share is reduced to $0.0023 per share for orders routed to LavaFlow that achieve certain volume thresholds, as EDGA Members are able to share in potential volume tier savings realized by EDGA when routing to LavaFlow.14 This rebate is also comparable to other rebates offered by 10 15 U.S.C. 78f. U.S.C. 78f(b)(4). 12 See EDGX fee schedule, footnote 1. 13 Id. 14 See footnote 6 of the EDGA fee schedule. 11 15 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 the Exchange that add liquidity, such as the ROOC 15 routing strategy, which yields Flags 8 and 9.16 For Flags 8 and 9, the Exchange passes through the default rebate (i.e., non-tier) from the primary listing market (i.e., NYSE Arca, NYSE Amex) to Members because DE Route does not generally achieve a favorable tier rate. This rate is also consistent with the processing of similar routing strategies by EDGA’s competitors where EDGA takes into account the rates that it is charged or rebated when routing to other low cost destinations.17 Finally, as another example, when EDGA routes to a primary exchange’s opening cross, (Flag O), the Exchange passes through the tier savings that DE Route achieves on an away exchange to its Members.18 This tier savings takes the form of a cap of Members’ fees at $10,000 per month for using Flag O. The Exchange believes that the rebate is consistent with how other Exchanges rebate Members for routing through an affiliated Exchange. For example, when a Member removes liquidity from Nasdaq BX, it is rebated $0.0005 per share if it does not achieve any tiers, or $0.0014 per share if it does achieve certain tiers.19 However, when the Member removes liquidity from Nasdaq BX by routing through Nasdaq OMX using any number of strategies such as SAVE/SOLV/CART, and removes liquidity from Nasdaq BX as a result, it is rewarded a higher rebate of $0.0014 per share.20 The Exchange believes that the rebate of $0.0027 is also reasonable as it is consistent with how other exchanges pass through charges or rebates for orders routed to a different exchange that add or remove liquidity. For example, when Nasdaq routes to Nasdaq PSX, Nasdaq passes back Nasdaq PSX’s standard charge of $0.0027 per share. When NYSE Arca routes to NYSE, NYSE Arca passes back the standard NYSE rebate of $0.0015 per share. These charges or rebates generally 15 See EDGA Exchange Rule 11.9(b)(3)(n). the EDGA Fee Schedule where Flag 8 offers a rebate of $.0015 where a member routes an order to NYSE Amex using the ROOC routing strategy and adds liquidity, and Flag 9 offers a rebate of $.0021 where a member routes an order to NYSE Arca using the ROOC routing strategy and adds liquidity. 17 See also BATS BZX fee schedule, describing Discounted Destination Specific Routing (‘‘One Under’’) to NYSE, NYSE ARCA and NASDAQ. See Securities Exchange Act Release No. 62858, 75 FR 55838 (September 14, 2010) (SR–BATS–2010–023) (modifying the BATS fee schedule in order to amend the fees for its BATS + NYSE Arca destination specific routing option to continue to offer a ‘‘one under’’ pricing model). 18 See footnote 5 of the EDGA fee schedule. 19 See Nasdaq OMX BX Rule 7018. 20 See Nasdaq OMX Rule 7018. 16 See E:\FR\FM\10FEN1.SGM 10FEN1 7227 Federal Register / Vol. 77, No. 28 / Friday, February 10, 2012 / Notices approximate what the originating exchange receives from the exchange that is routed to plus or minus a certain differential. EDGA’s pricing is consistent with this premise. The Exchange believes that the proposed rebate is non-discriminatory in that it applies uniformly to all Members. The Exchange also notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive. The proposed rule change reflects a competitive pricing structure designed to incent market participants to direct their order flow to the Exchange. The Exchange believes that the proposed rates are equitable and nondiscriminatory in that they apply uniformly to all Members. The Exchange believes the fees and credits remain competitive with those charged by other venues and therefore continue to be reasonable and equitably allocated to Members. 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 on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. srobinson on DSK4SPTVN1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3) of the Act 21 and Rule 19b–4(f)(2) 22 thereunder. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–3095 Filed 2–9–12; 8:45 am] Electronic Comments BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–EDGA–2012–03 on the subject line. 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–2012–03. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–EDGA– 2012–03 and should be submitted on or before March 2, 2012. SMALL BUSINESS ADMINISTRATION [Disaster Declaration #13002 and #13003] Alabama Disaster #AL–00040 U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a Notice of the Presidential declaration of a major disaster for the State of Alabama (FEMA–4052–DR), dated 02/01/2012. Incident: Severe Storms, Tornadoes, Straight-Line Winds, and Flooding. Incident Period: 01/22/2012 through 01/23/2012. Effective Date: 02/01/2012. Physical Loan Application Deadline Date: 04/02/2012. Economic Injury (EIDL) Loan Application Deadline Date: 11/01/2012. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President’s major disaster declaration on 02/01/2012, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties (Physical Damage and Economic Injury Loans): Chilton, Jefferson. Contiguous Counties (Economic Injury Loans Only) Alabama: Autauga, Bibb, Blount, Coosa, Dallas, Elmore, Perry, Saint Clair, Shelby, Tuscaloosa, Walker. The Interest Rates are: SUMMARY: Percent For Physical Damage: Homeowners With Credit Available Elsewhere ...................... 21 15 U.S.C. 78s(b)(3)(A). 22 17 CFR 19b–4(f)(2). VerDate Mar<15>2010 21:29 Feb 09, 2012 23 17 Jkt 226001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\10FEN1.SGM CFR 200.30–3(a)(12). 10FEN1 4.125

Agencies

[Federal Register Volume 77, Number 28 (Friday, February 10, 2012)]
[Notices]
[Pages 7225-7227]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3095]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66335; File No. SR-EDGA-2012-03]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Amendments to the EDGA Exchange, Inc. Fee Schedule

February 6, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 31, 2012, the EDGA Exchange, Inc. (the ``Exchange'' or 
the ``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which items have been prepared by the self-regulatory 
organization. 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.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its fees and rebates applicable to 
Members \3\ of the Exchange pursuant to EDGA Rule 15.1(a) and (c). All 
of the changes described herein are applicable to EDGA Members. The 
text of the proposed rule change is available on the Exchange's 
Internet Web site at https://www.directedge.com, at the Exchange's 
principal office, and at the Public Reference Room of the Commission.
---------------------------------------------------------------------------

    \3\ A Member is any registered broker or dealer, or any person 
associated with a registered broker or dealer, that has been 
admitted to membership in the Exchange.
---------------------------------------------------------------------------

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 self-regulatory organization 
included statements concerning the purpose of,

[[Page 7226]]

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In SR-EDGA-2011-40,\4\ the Exchange amended several routing options 
contained in Rule 11.9(b)(3) to allow Users \5\ more discretion if 
shares remain unexecuted after routing. In particular, Rule 11.9(b)(3) 
was amended to provide that Users may elect that any remainder of an 
order be posted to the EDGX Exchange, Inc. (``EDGX'') for any of the 
routing options listed in the rule, except those listed.\6\ As a result 
of this amendment, the Exchange proposes to make a corresponding 
amendment to Flag P of its fee schedule. The subject amendment provides 
a rebate of $0.0027 per share for any order that after passing through 
EDGA and other destinations adds liquidity to EDGX (including during 
the Pre-Opening Session \7\ and Post-Closing Sessions) \8\ and yields 
Flag P. This would occur as a result of the Member's order using any of 
the routing strategies listed in Rule 11.9(b)(3) where the residual of 
the order posts to EDGX.\9\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 66231 (January 24, 
2012), 77 FR 4605 (January 30, 2012).
    \5\ As defined in Rule 1.5(cc) [sic].
    \6\ Routing options listed in Rules 11.9(b)(3)(a) and (n)-(q) 
are not altered as a result of this amendment. The routing option in 
Rule 11.9(b)(3)(a) already posts to EDGX and no amendment to the 
rule was needed as no discretion is provided to the User. The 
routing options in Rules 11.9(b)(3)(n)-(q) do not have the option to 
post the remainder of an order to EDGX.
    \7\ As defined in EDGA Rule 1.5(s).
    \8\ As defined in EDGA Rule 1.5(r).
    \9\ This includes all routing strategies in Rule 11.9(b)(3), 
except for (n)-(q), that do not have the option to post the 
remainder of an order to EDGX.
---------------------------------------------------------------------------

    As a result of this change, the Exchange proposes to revise the 
description on the Flag P to broaden its applicability to several 
routing strategies, instead of just an EDGA-originated ROUC routing 
strategy. The Flag P is thus proposed to state ``Adds liquidity on 
EDGX, including pre & post market.''
    The Exchange proposes to implement this amendment to its fee 
schedule on February 1, 2012.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other persons using its 
facilities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the rebate for Flag P of $0.0027 per 
share is an equitable allocation of reasonable dues, fees, and other 
charges. First, the rebate is designed to incentivize Members to route 
through EDGA using any of the applicable strategies listed in Rule 
11.9(b)(3), as discussed above, to reach multiple sources of liquidity 
on EDGA before routing to other destinations, and thereby potentially 
increases volume on EDGA to the extent an order using any of these 
routing strategies executes on EDGA. The routing strategy allows 
Members to reach multiple sources of liquidity by routing order flow 
through EDGA rather than going directly to various venues. The rebate 
provides Members with a flat rate of $0.0027 per share rebate if the 
particular routing strategy posts to EDGX and is later executed. When 
the Exchange's routing broker/dealer, Direct Edge ECN LLC d/b/a DE 
Route (``DE Route'') achieves certain tiers on EDGX using any of the 
applicable routing strategies in Rule 11.9(b)(3) that post residual on 
EDGX, it is able to pass through a better rebate than if it had not 
achieved a tier.\12\ For example, if the Member had routed to EDGX 
directly and the order had added liquidity to EDGX, the Member could 
receive rebates ranging from $0.0023-$0.0034, depending on if a volume 
threshold were satisfied. \13\ The $0.0027 per share rebate thus 
represents a rate in between these various tiered and non-tiered 
rebates provided for adding liquidity to EDGX. This allows EDGA Members 
to share in potential volume tier savings realized by DE Route when it 
achieves certain tiers.
---------------------------------------------------------------------------

    \12\ See EDGX fee schedule, footnote 1.
    \13\ Id.
---------------------------------------------------------------------------

    This type of rate is also similar to EDGA's rate for removing 
liquidity from LavaFlow (Flag U). The standard removal rate of $0.0029 
per share is reduced to $0.0023 per share for orders routed to LavaFlow 
that achieve certain volume thresholds, as EDGA Members are able to 
share in potential volume tier savings realized by EDGA when routing to 
LavaFlow.\14\ This rebate is also comparable to other rebates offered 
by the Exchange that add liquidity, such as the ROOC \15\ routing 
strategy, which yields Flags 8 and 9.\16\ For Flags 8 and 9, the 
Exchange passes through the default rebate (i.e., non-tier) from the 
primary listing market (i.e., NYSE Arca, NYSE Amex) to Members because 
DE Route does not generally achieve a favorable tier rate. This rate is 
also consistent with the processing of similar routing strategies by 
EDGA's competitors where EDGA takes into account the rates that it is 
charged or rebated when routing to other low cost destinations.\17\ 
Finally, as another example, when EDGA routes to a primary exchange's 
opening cross, (Flag O), the Exchange passes through the tier savings 
that DE Route achieves on an away exchange to its Members.\18\ This 
tier savings takes the form of a cap of Members' fees at $10,000 per 
month for using Flag O.
---------------------------------------------------------------------------

    \14\ See footnote 6 of the EDGA fee schedule.
    \15\ See EDGA Exchange Rule 11.9(b)(3)(n).
    \16\ See the EDGA Fee Schedule where Flag 8 offers a rebate of 
$.0015 where a member routes an order to NYSE Amex using the ROOC 
routing strategy and adds liquidity, and Flag 9 offers a rebate of 
$.0021 where a member routes an order to NYSE Arca using the ROOC 
routing strategy and adds liquidity.
    \17\ See also BATS BZX fee schedule, describing Discounted 
Destination Specific Routing (``One Under'') to NYSE, NYSE ARCA and 
NASDAQ. See Securities Exchange Act Release No. 62858, 75 FR 55838 
(September 14, 2010) (SR-BATS-2010-023) (modifying the BATS fee 
schedule in order to amend the fees for its BATS + NYSE Arca 
destination specific routing option to continue to offer a ``one 
under'' pricing model).
    \18\ See footnote 5 of the EDGA fee schedule.
---------------------------------------------------------------------------

    The Exchange believes that the rebate is consistent with how other 
Exchanges rebate Members for routing through an affiliated Exchange. 
For example, when a Member removes liquidity from Nasdaq BX, it is 
rebated $0.0005 per share if it does not achieve any tiers, or $0.0014 
per share if it does achieve certain tiers.\19\ However, when the 
Member removes liquidity from Nasdaq BX by routing through Nasdaq OMX 
using any number of strategies such as SAVE/SOLV/CART, and removes 
liquidity from Nasdaq BX as a result, it is rewarded a higher rebate of 
$0.0014 per share.\20\
---------------------------------------------------------------------------

    \19\ See Nasdaq OMX BX Rule 7018.
    \20\ See Nasdaq OMX Rule 7018.
---------------------------------------------------------------------------

    The Exchange believes that the rebate of $0.0027 is also reasonable 
as it is consistent with how other exchanges pass through charges or 
rebates for orders routed to a different exchange that add or remove 
liquidity. For example, when Nasdaq routes to Nasdaq PSX, Nasdaq passes 
back Nasdaq PSX's standard charge of $0.0027 per share. When NYSE Arca 
routes to NYSE, NYSE Arca passes back the standard NYSE rebate of 
$0.0015 per share. These charges or rebates generally

[[Page 7227]]

approximate what the originating exchange receives from the exchange 
that is routed to plus or minus a certain differential. EDGA's pricing 
is consistent with this premise.
    The Exchange believes that the proposed rebate is non-
discriminatory in that it applies uniformly to all Members.
    The Exchange also notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive. The proposed rule change reflects a competitive pricing 
structure designed to incent market participants to direct their order 
flow to the Exchange. The Exchange believes that the proposed rates are 
equitable and non-discriminatory in that they apply uniformly to all 
Members. The Exchange believes the fees and credits remain competitive 
with those charged by other venues and therefore continue to be 
reasonable and equitably allocated to Members.

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 on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3) of the Act \21\ and Rule 19b-4(f)(2) \22\ thereunder. 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.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-EDGA-2012-03 on the subject line.

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-2012-03. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-EDGA-2012-03 and should be 
submitted on or before March 2, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3095 Filed 2-9-12; 8:45 am]
BILLING CODE 8011-01-P
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