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, 41847-41849 [2012-17198]

Download as PDF Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices 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– NASDAQ–2012–81 and should be submitted on or before August 6, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17274 Filed 7–13–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67380; File No. SR–EDGA– 2012–29] 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 July 10, 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 June 29, 2012, EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. srobinson on DSK4SPTVN1PROD with NOTICES 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 8 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 VerDate Mar<15>2010 16:32 Jul 13, 2012 Jkt 226001 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, 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 Flag DM is yielded where nondisplayed orders add or remove liquidity using the Mid-Point Discretionary order type.4 In order to provide additional transparency to Members and for the reasons discussed below, Flag DM is proposed to be bifurcated into two flags: Flag DM (adds liquidity in the discretionary range) and Flag DT (removes liquidity in the discretionary range). The Exchange proposes to continue to charge a fee of $0.0005 per share for Flags DM and DT.5 In addition, the Exchange proposes to delete Footnote 18 that is appended to Flag DM in the fee schedule because the proposed Flags DM and DT will count towards volume tiers as the Exchange can now differentiate between nondisplayed liquidity that adds liquidity in the discretionary range from nondisplayed liquidity that removes liquidity in the discretionary range.6 The Exchange also proposes to amend Flag K to only apply to Members’ orders routed to NASDAQ OMX PSX (‘‘PSX’’) using the ROUC or ROUE routing strategy as defined in Rule 11.9(b)(3). The Exchange proposes to reduce the rate from $0.0025 per share to $0.0005 per share, which represents a passthrough of the Exchange’s rate for 4 See Securities Exchange Act Release No. 67226 (June 20, 2012), 77 FR 38113 (June 26, 2012) (SR– EDGA–2012–22). 5 See SR–EDGA–2012–24 (June 19, 2012) (describing the Exchange’s proposal to amend its fee schedule pursuant to Rule 15.1(a) and (c) regarding Flag DM). 6 See SR–EDGA–2012–24 (June 19, 2012) (where the Exchange excluded the volume generated from Flag DM from counting towards the volume tiers because a Member could potentially receive Flag DM if the Member either added or removed liquidity using the Midpoint Discretionary Order). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 41847 routing orders to PSX, in response to the proposed pricing changes in PSX’s pending filing with the Commission.7 Accordingly, where Members’ orders are routed to the BATS BZX Exchange (‘‘BATS BZX’’) using the ROBA routing strategy (EDGA + BATS), the Exchange proposes to apply Flag X, which is yielded when Members route orders through EDGA and the Exchange assesses a charge of $0.0029 per share. Similarly, the Exchange also proposes to amend the rate for Flag RS, which is yielded when Members route orders to PSX that add liquidity. The Exchange proposes to amend the pricing for Flag RS from a rebate of $0.0024 per share to a charge of $0.0005 per share in response to PSX’s pending filing, which represents a pass-through of the Exchange’s rate for routing orders to PSX. The Exchange proposes to implement these amendments to its fee schedule on July 1, 2012. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with the objectives of Section 6 of the Act,8 in general, and furthers the objectives of Section 6(b)(4),9 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 proposed technical amendment to bifurcate Flag DM into Flags DM and DT promotes market transparency and improves investor protection by adding additional transparency to its fee schedule by more precisely delineating for Members whether they are ‘‘adders of liquidity’’ or ‘‘removers of liquidity’’ for purposes of Members’ non-displayed orders using the Mid-Point Discretionary order type. In addition, the Exchange believes that counting Flags DM and DT towards volume tiers is reasonable and equitable as the Exchange can now differentiate between non-displayed liquidity that adds liquidity in the discretionary range from non-displayed liquidity that removes liquidity in the discretionary range, as explained above. Including Flags DM and DT in volume tiers allows their associated volume to be tracked by the Exchange in the appropriate tier(s), which may incent Members to increase use of the volume tiers in the fee 7 See PSX’s Equity Trader Alert #2012–28 at https://www.nasdaqtrader.com/ TraderNews.aspx?id=ETA2012–28 (discussing PSX’s pending fee changes effective July 2, 2012). 8 15 U.S.C. 78f. 9 15 U.S.C. 78f(b)(4). E:\FR\FM\16JYN1.SGM 16JYN1 srobinson on DSK4SPTVN1PROD with NOTICES 41848 Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices schedule. Such volume will increase potential revenue to the Exchange, and would allow the Exchange to spread its administrative and infrastructure costs over a greater number of shares, leading to lower per share costs. These lower per share costs would allow the Exchange to pass on the savings to Members in the form of higher rebates/ lower costs. The increased liquidity also benefits all investors by deepening EDGA’s liquidity pool, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. The Exchange also believes that proposed change is nondiscriminatory because it applies uniformly to all Members. The rates and rebates associated with routing orders to PSX on the Exchange’s fee schedule are pass-through rates. Currently, PSX charges the Exchange $0.0025 per share for Members’ orders that are routed to PSX using the ROUC or ROUE routing strategy and the Exchange charges its Members $0.0025 per share as a pass-through. Therefore, the Exchange believes that the proposed reduction from $0.0025 per share to $0.0005 per share is equitable and reasonable because PSX is reducing the rate it charges the Exchange for routing to PSX to $0.0005. Currently, PSX provides the Exchange a rebate of $0.0024 per share for Members’ orders that are routed to PSX and add liquidity and the Exchange rebates Members $0.0024 per share as a pass-through (Flag RS). Therefore, the Exchange believes that the proposed reduction from a rebate of $0.0024 per share to a charge of $0.0005 per share is equitable and reasonable because PSX is increasing the rate it charges the Exchange for routing to PSX to $0.0005 per share. In addition, the Exchange also believes that the proposed pass-through of this rate is non-discriminatory because it applies uniformly to all Members. The Exchange believes that increasing the charge assessed for Members’ orders that are routed to BATS BZX using the ROBA routing strategy (EDGA + BATS) from $0.0025 per share to $0.0029 per share (yielding Flag X) is equitable and reasonable because the Exchange is removing the $0.0004 per share incentive it previously associated with this routing strategy and replacing it with a straight pass-through of the charge BATS BZX assesses the Exchange for removing liquidity from the BZX Exchange order book.10 Accordingly, the Exchange will assess a charge of $0.0029 per share for Members’ orders that route to BATS BZX using the ROBA routing strategy as well as other routed orders that yield Flag X. In addition, the Exchange also believes that the proposed pass-through of this rate is non-discriminatory because 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. 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 11 and Rule 19b–4(f)(2) 12 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. 11 15 10 See BATS BZX fee schedule at https:// batstrading.com/FeeSchedule/. VerDate Mar<15>2010 16:32 Jul 13, 2012 Jkt 226001 12 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00108 Fmt 4703 Sfmt 4703 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 rulecomments@sec.gov. Please include File Number SR–EDGA–2012–29 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–2012–29. 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 a.m. and 3 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– 2012–29 and should be submitted on or before August 6, 2012. E:\FR\FM\16JYN1.SGM 16JYN1 Federal Register / Vol. 77, No. 136 / Monday, July 16, 2012 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–17198 Filed 7–13–12; 8:45 am] BILLING CODE 8011–01–P proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67372; File No. SR– NYSEARCA–2012–54] A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Deleting the Rule Text of NYSE Arca Rule 9.20(b), Which Addresses Telemarketing, and Adopting New Rule Text to NYSE Arca Rule 9.20(b) To Conform to FINRA’s Telemarketing Rule July 10, 2012. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on June 25, 2012, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to delete the rule text of NYSE Arca Rule 9.20(b), which addresses telemarketing, and adopt new rule text that is substantially similar to FINRA Rule 3230. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. srobinson on DSK4SPTVN1PROD with NOTICES 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 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:32 Jul 13, 2012 Jkt 226001 The Exchange proposes to delete the rule text of NYSE Arca Rule 9.20(b), which addresses telemarketing, and adopt new rule text that is substantially similar to FINRA Rule 3230.4 Proposed Rule Change The Exchange proposes to delete the rule text of NYSE Arca Rule 9.20(b) and adopt new rule text to NYSE Arca Rule 9.20(b) to conform to the changes adopted by FINRA for telemarketing. FINRA adopted NASD Rule 2212 as FINRA Rule 3230, taking into account FINRA Incorporated New York Stock Exchange LLC (‘‘NYSE’’) Rule 440A and NYSE Interpretation 440A/01. FINRA Rule 3230 adds provisions that are substantially similar to Federal Trade Commission (‘‘FTC’’) rules that prohibit deceptive and other abusive telemarketing acts or practices. NYSE Arca Rule 9.20(b) and NASD Rule 2212 are similar rules that require members to maintain do-not-call lists, limit the hours of telephone solicitations and prohibit members from using deceptive and abusive acts and practices in connection with telemarketing. The Commission directed FINRA and the Exchange to enact these telemarketing rules in accordance with the Telemarketing Consumer Fraud and Abuse Prevention Act of 1994 (‘‘Prevention Act’’).5 The Prevention Act requires the Commission to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices.6 In 2003, the FTC and the Federal Communications Commission (‘‘FCC’’) established requirements for sellers and telemarketers to participate in the 4 See Securities Exchange Act Release No. 66279 (January 30, 2012), 77 FR 5611 (February 3, 2012) (SR–FINRA–2011–059). FINRA’s rule change will become effective on July 9, 2012. See FINRA Regulatory Notice 12–17. 5 15 U.S.C. 6101–6108. 6 15 U.S.C. 6102. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 41849 national do-not-call registry.7 Pursuant to the Prevention Act, the Commission requested that FINRA and the Exchange amend their telemarketing rules to include a requirement that their members participate in the national donot-call registry. In 2004, the Commission approved amendments to NASD Rule 2212 requiring member firms to participate in the national donot-call registry.8 The following year, the Commission approved amendments to NYSE Arca Rule 9.20(b), which were similar to the NASD rule amendments, but included additional provisions regarding the use of caller identification information, pre-recorded messages, telephone facsimiles and computer advertisements.9 As mentioned above, the Prevention Act requires the Commission to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices.10 In 2011, Commission staff directed all exchanges and FINRA to conduct a review of their telemarketing rules and propose rule amendments that provide protections that are at least as strong as those provided by the FTC’s telemarketing rules. FINRA’s adoption of FINRA Rule 3230 reflects amendments to NASD Rule 2212 and FINRA Incorporated NYSE Rule 440A that update those rules to meet the standards of the Prevention Act.11 The proposed rule change, as directed by the Commission staff, adopts provisions in proposed NYSE Arca Rule 9.20(b) that are substantially similar to the FTC’s current rules that prohibit deceptive and other abusive telemarketing acts or practices as described below.12 Telemarketing Requirements Proposed NYSE Arca Rule 9.20(b)(1) provides that no OTP Firm, OTP Holder, 7 See 68 FR 4580 (January 29, 2003); 68 FR 44144 (July 25, 2003); CG Docket No. 02–278, FCC 03–153, (adopted June 26, 2003; released July 3, 2003). 8 See Securities Exchange Act Release No. 49055 (January 12, 2004), 69 FR 2801 (January 20, 2004) (Order Approving File No. SR–NASD–2003–131). 9 See Securities Exchange Act Release No. 54282 (August 8, 2006), 71 FR 46534 (August 14, 2006) (Order Approving File No. SR–PCX–2005–54). 10 15 U.S.C. 6102. 11 See Securities Exchange Act Release No. 65645 (October 27, 2011), 76 FR 67787 (November 2, 2011) (Order Approving File No. SR–FINRA–2011–059). 12 The text of proposed NYSE Arca Rule 9.20(b) would be the same as FINRA Rule 3230, except that (i) the Exchange would substitute the terms ‘‘OTP Firm’’ and ‘‘OTP Holder’’ for ‘‘member;’’ and (ii) the Exchange would substitute the term ‘‘Associated Person’’ for ‘‘person associated with a member.’’ E:\FR\FM\16JYN1.SGM 16JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41847-41849]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17198]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67380; File No. SR-EDGA-2012-29]

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

July 10, 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 June 29, 2012, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which items have been prepared by the self-regulatory
organization. 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.
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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.
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\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.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
Flag DM is yielded where non-displayed orders add or remove
liquidity using the Mid-Point Discretionary order type.\4\ In order to
provide additional transparency to Members and for the reasons
discussed below, Flag DM is proposed to be bifurcated into two flags:
Flag DM (adds liquidity in the discretionary range) and Flag DT
(removes liquidity in the discretionary range). The Exchange proposes
to continue to charge a fee of $0.0005 per share for Flags DM and
DT.\5\
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\4\ See Securities Exchange Act Release No. 67226 (June 20,
2012), 77 FR 38113 (June 26, 2012) (SR-EDGA-2012-22).
\5\ See SR-EDGA-2012-24 (June 19, 2012) (describing the
Exchange's proposal to amend its fee schedule pursuant to Rule
15.1(a) and (c) regarding Flag DM).
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In addition, the Exchange proposes to delete Footnote 18 that is
appended to Flag DM in the fee schedule because the proposed Flags DM
and DT will count towards volume tiers as the Exchange can now
differentiate between non-displayed liquidity that adds liquidity in
the discretionary range from non-displayed liquidity that removes
liquidity in the discretionary range.\6\
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\6\ See SR-EDGA-2012-24 (June 19, 2012) (where the Exchange
excluded the volume generated from Flag DM from counting towards the
volume tiers because a Member could potentially receive Flag DM if
the Member either added or removed liquidity using the Midpoint
Discretionary Order).
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The Exchange also proposes to amend Flag K to only apply to
Members' orders routed to NASDAQ OMX PSX (``PSX'') using the ROUC or
ROUE routing strategy as defined in Rule 11.9(b)(3). The Exchange
proposes to reduce the rate from $0.0025 per share to $0.0005 per
share, which represents a pass-through of the Exchange's rate for
routing orders to PSX, in response to the proposed pricing changes in
PSX's pending filing with the Commission.\7\ Accordingly, where
Members' orders are routed to the BATS BZX Exchange (``BATS BZX'')
using the ROBA routing strategy (EDGA + BATS), the Exchange proposes to
apply Flag X, which is yielded when Members route orders through EDGA
and the Exchange assesses a charge of $0.0029 per share.
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\7\ See PSX's Equity Trader Alert 2012-28 at https://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2012-28 (discussing PSX's
pending fee changes effective July 2, 2012).
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Similarly, the Exchange also proposes to amend the rate for Flag
RS, which is yielded when Members route orders to PSX that add
liquidity. The Exchange proposes to amend the pricing for Flag RS from
a rebate of $0.0024 per share to a charge of $0.0005 per share in
response to PSX's pending filing, which represents a pass-through of
the Exchange's rate for routing orders to PSX.
The Exchange proposes to implement these amendments to its fee
schedule on July 1, 2012.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ 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.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed technical amendment to
bifurcate Flag DM into Flags DM and DT promotes market transparency and
improves investor protection by adding additional transparency to its
fee schedule by more precisely delineating for Members whether they are
``adders of liquidity'' or ``removers of liquidity'' for purposes of
Members' non-displayed orders using the Mid-Point Discretionary order
type. In addition, the Exchange believes that counting Flags DM and DT
towards volume tiers is reasonable and equitable as the Exchange can
now differentiate between non-displayed liquidity that adds liquidity
in the discretionary range from non-displayed liquidity that removes
liquidity in the discretionary range, as explained above. Including
Flags DM and DT in volume tiers allows their associated volume to be
tracked by the Exchange in the appropriate tier(s), which may incent
Members to increase use of the volume tiers in the fee

[[Page 41848]]

schedule. Such volume will increase potential revenue to the Exchange,
and would allow the Exchange to spread its administrative and
infrastructure costs over a greater number of shares, leading to lower
per share costs. These lower per share costs would allow the Exchange
to pass on the savings to Members in the form of higher rebates/lower
costs. The increased liquidity also benefits all investors by deepening
EDGA's liquidity pool, offering additional flexibility for all
investors to enjoy cost savings, supporting the quality of price
discovery, promoting market transparency and improving investor
protection. The Exchange also believes that proposed change is non-
discriminatory because it applies uniformly to all Members.
The rates and rebates associated with routing orders to PSX on the
Exchange's fee schedule are pass-through rates. Currently, PSX charges
the Exchange $0.0025 per share for Members' orders that are routed to
PSX using the ROUC or ROUE routing strategy and the Exchange charges
its Members $0.0025 per share as a pass-through. Therefore, the
Exchange believes that the proposed reduction from $0.0025 per share to
$0.0005 per share is equitable and reasonable because PSX is reducing
the rate it charges the Exchange for routing to PSX to $0.0005.
Currently, PSX provides the Exchange a rebate of $0.0024 per share for
Members' orders that are routed to PSX and add liquidity and the
Exchange rebates Members $0.0024 per share as a pass-through (Flag RS).
Therefore, the Exchange believes that the proposed reduction from a
rebate of $0.0024 per share to a charge of $0.0005 per share is
equitable and reasonable because PSX is increasing the rate it charges
the Exchange for routing to PSX to $0.0005 per share. In addition, the
Exchange also believes that the proposed pass-through of this rate is
non-discriminatory because it applies uniformly to all Members.
The Exchange believes that increasing the charge assessed for
Members' orders that are routed to BATS BZX using the ROBA routing
strategy (EDGA + BATS) from $0.0025 per share to $0.0029 per share
(yielding Flag X) is equitable and reasonable because the Exchange is
removing the $0.0004 per share incentive it previously associated with
this routing strategy and replacing it with a straight pass-through of
the charge BATS BZX assesses the Exchange for removing liquidity from
the BZX Exchange order book.\10\ Accordingly, the Exchange will assess
a charge of $0.0029 per share for Members' orders that route to BATS
BZX using the ROBA routing strategy as well as other routed orders that
yield Flag X. In addition, the Exchange also believes that the proposed
pass-through of this rate is non-discriminatory because it applies
uniformly to all Members.
---------------------------------------------------------------------------

\10\ See BATS BZX fee schedule at https://batstrading.com/FeeSchedule/.
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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 \11\ and Rule 19b-4(f)(2) \12\ 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-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-2012-29 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-2012-29. 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
a.m. and 3 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-2012-29 and should be
submitted on or before August 6, 2012.

[[Page 41849]]

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17198 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P

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