Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to the EDGX Exchange, Inc.'s Routing Broker Dealer, as Described in EDGX Rule 2.12(b), 31994-31996 [2013-12533]
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Federal Register / Vol. 78, No. 102 / Tuesday, May 28, 2013 / Notices
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consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange 5 and, in particular,
the requirements of Sections 6(b)(3) 6
and 6(b)(5) of the Act.7 The proposal
will reduce from three to one the
minimum number of Public Directors 8
that will be required to be included in
the calculation of Non-Industry
Directors 9 for the purpose of
determining the number of NonIndustry Directors that may serve on the
BX Board. The Exchange proposed this
change in light of the cessation in 2012
by the Boston Options Exchange LLC
(‘‘BOX’’) of its operations as an options
trading facility of the Exchange 10 and
the termination of the Regulatory
Services Agreement (‘‘RSA’’) between
BX and BOX.11 To accommodate BOX
when BOX was a BX facility, three
Public Directors were required to be
included in the calculation of the
number of Non-Industry Directors on
the BX Board.12 The Commission notes
that, although only one Public Director
must be included in the composition of
Non-Industry Directors as a result of the
proposed rule change, the requirement
in BX By-Law Article IV, Section 4.3
that the number of Non-Industry
5 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
6 15 U.S.C. 78f(b)(3).
7 15 U.S.C. 78f(b)(5).
8 Pursuant to BX By-Law Article I(gg), a Public
Director is a Director who has no material business
relationship with a broker or dealer, the
Corporation (i.e., the Exchange) or its affiliates, or
FINRA.
9 Pursuant to BX By-Law Article I(bb), a NonIndustry Director is a Director (excluding Staff
Directors) who is (i) a Public Director; (ii) an officer
or employee of an issuer of securities listed on the
Exchange; or (iii) any other individual who would
not be an Industry Director.
10 BOX was a facility of the Exchange under
Section 39(a)(2) of the Act. See Securities Exchange
Act Release Nos. 49066 (January 13, 2004), 69 FR
2773 (January 20, 2004) (SR–BSE–2003–17); 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004)
(SR–BSE–2003–04) (‘‘BOXR Order’’); and 49068
(January 13, 2004), 69 FR 2775 (January 20, 2004)
(SR–BSE–2002–15). See also Release No. 58324; 73
FR 46936 (August 7, 2008) (File Nos. SR–BSE–
2008–02; SR–BSE–2008–23; SR–BSE–2008–25; SR–
BSECC–2008–01) (‘‘Order Approving the
Acquisition of the Boston Stock Exchange,
Incorporated by The NASDAQ OMX Group, Inc.’’).
11 The RSA specified, among other matters, that
BX would terminate its responsibility for fulfilling
certain obligations and cease performing certain
regulatory functions as of the effective date of June
1, 2012, or sooner if BOX satisfied all of the
conditions required for BOX to operate as a national
securities exchange.
12 See Securities Exchange Act Release No. 34–
58324 (August 7, 2008), 73 FR 46936 (August 12,
2008) (File Nos. SR–BSE–2008–02; SR–BSE–2008–
23; SR–BSE–2008–25; SR–BSECC–2008–01); see
also Securities Exchange Act Release No. 67009
(May 17, 2012), 77 FR 30566 (May 23, 2012) (SR–
BX–2012–036).
VerDate Mar<15>2010
17:46 May 24, 2013
Jkt 229001
Directors must equal or exceed the sum
of Industry Directors 13 and Member
Representative Directors 14 will
continue to be met. Moreover, the
Commission notes that, as a result of the
proposed rule change, the BX Board
composition requirement regarding
Public Directors now will be similar to
the board composition requirements of
NASDAQ OMX PHLX LLC (‘‘Phlx’’) and
The NASDAQ Stock Market LLC
(‘‘NASDAQ’’), both of which require
that the number of Non-Industry
Directors must include at least one
Public Director.15 In addition, the
Commission notes that the BX Board
will continue to have three Public
Directors, because the BX Board still
will need to have three Public Directors
available to serve on its Regulatory
Oversight Committee, as required by BX
By-Law Article IV, Section 4.13. For the
foregoing reasons, the Commission
13 Pursuant to BX By-Law Article I(t), an Industry
Director is a Director (excluding any two officers of
the Corporation, selected at the sole discretion of
the Board, amongst those officers who may be
serving as Directors (the ‘‘Staff Directors’’)), who (i)
is or has served in the prior three years as an officer,
director, or employee of a broker or dealer,
excluding an outside director or a director not
engaged in the day-to-day management of a broker
or dealer; (ii) is an officer, director (excluding an
outside director), or employee of an entity that
owns more than ten percent of the equity of a
broker or dealer, and the broker or dealer accounts
for more than five percent of the gross revenues
received by the consolidated entity; (iii) owns more
than five percent of the equity securities of any
broker or dealer, whose investments in brokers or
dealers exceed ten percent of his or her net worth,
or whose ownership interest otherwise permits him
or her to be engaged in the day-to-day management
of a broker or dealer; (iv) provides professional
services to brokers or dealers, and such services
constitute twenty percent or more of the
professional revenues received by the Director or
twenty percent or more of the gross revenues
received by the Director’s firm or partnership; (v)
provides professional services to a director, officer,
or employee of a broker, dealer, or corporation that
owns fifty percent or more of the voting stock of a
broker or dealer, and such services relate to the
director’s, officer’s, or employee’s professional
capacity and constitute twenty percent or more of
the professional revenues received by the Director
or twenty percent or more of the gross revenues
received by the Director’s firm or partnership; or
(vi) has a consulting or employment relationship
with or provides professional services to the
Corporation or any affiliate thereof or to FINRA or
has had any such relationship or provided any such
services at any time within the prior three years.
14 Pursuant to BX By-Law Article I(x), a Member
Representative Director is a Director who has been
elected by the stockholders after having been
nominated by the Member Nominating Committee
or voted upon by Exchange Members pursuant to
the BX By-Laws (or elected by the stockholders
without such nomination or voting in the case of
the Member Representative Directors elected
pursuant to Article IV, Section 4.3(b)). A Member
Representative Director may, but is not required to
be, an officer, director, employee, or agent of an
Exchange Member.
15 See Phlx By-Law Article III, Section 3–2(a) and
NASDAQ By-Law Article III, Section 2(a).
PO 00000
Frm 00111
Fmt 4703
Sfmt 4703
believes that the proposed rule change
is consistent with the Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that the
proposed rule change (SR–BX–2013–
029) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–12486 Filed 5–24–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69614; File No. SR–EDGX–
2013–17]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing of
Proposed Rule Change Relating to the
EDGX Exchange, Inc.’s Routing Broker
Dealer, as Described in EDGX Rule
2.12(b)
May 21, 2013.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 16,
2013, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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 self-regulatory
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 make
permanent the existing pilot program
that permits the Exchange’s inbound
router, as described in Rule 2.12(b), to
receive inbound routes of equities
orders through Direct Edge ECN LLC
d/b/a DE Route (‘‘DE Route’’), the
Exchange’s routing broker dealer, from
EDGA Exchange, Inc. (‘‘EDGA’’). All of
the changes described herein are
applicable to EDGX Members. The text
of the proposed rule change is available
on the Exchange’s Internet Web site at
www.directedge.com, at the Exchange’s
principal office, and at the Public
Reference Room of the Commission.
16 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
17 17
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Federal Register / Vol. 78, No. 102 / Tuesday, May 28, 2013 / 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
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.
mstockstill on DSK4VPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Currently, DE Route is the approved
outbound order routing facility of
EDGA.4 The Exchange has been
authorized to receive inbound routes of
equities orders by DE Route from EDGA.
The Exchange’s authority to receive
inbound routes of equities orders by DE
Route from EDGA is currently subject to
a pilot period of twelve months, ending
June 30, 2013.5 The Exchange hereby
seeks permanent approval to permit the
Exchange to accept inbound orders that
DE Route routes in its capacity as a
facility of EDGA. This is reflected in the
proposed amendment to EDGX Rule
2.12(b).
Under the pilot, the Exchange is
committed to the following obligations
and conditions:
• The Exchange shall: (a) Enter into a
plan pursuant to Rule 17d–2 under the
Exchange Act with a non-affiliated selfregulatory organization (‘‘SRO’’) to
relieve the Exchange of regulatory
responsibilities for DE Route with
respect to rules that are common rules
between the Exchange and the SRO, and
(b) enter into a regulatory services
contract (‘‘Regulatory Contract’’) with a
non-affiliated SRO to perform regulatory
responsibilities for DE Route for unique
Exchange rules.
• The regulatory services contract
shall require the Exchange to provide
the non-affiliated SRO with information,
in an easily accessible manner,
regarding all exception reports, alerts,
complaints, trading errors,
cancellations, investigations, and
enforcement matters (collectively
‘‘Exceptions’’) in which DE Route is
4 See Securities Exchange Act Release No. 61698
(March 12, 2010), 75 FR 13151 (March 18, 2010).
5 See Securities Exchange Act Release No. 66644
(March 22, 2012), 77 FR 18877 (March 28, 2012)
(SR–EDGX–2012–09).
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17:46 May 24, 2013
Jkt 229001
identified as a participant that has
potentially violated Exchange or SEC
Rules, and shall require that the nonaffiliated SRO provide a report, at least
quarterly, to the Exchange quantifying
all Exceptions in which DE Route is
identified as a participant that has
potentially violated Exchange or SEC
rules.
• The Exchange, on behalf of Direct
Edge Holdings LLC, shall establish and
maintain procedures and internal
controls reasonably designed to ensure
that DE Route does not develop or
implement changes to its system on the
basis of non-public information
obtained as a result of its affiliation with
the Exchange until such information is
available generally to similarly situated
Members 6 in connection with the
provision of inbound order routing to
the Exchange.
The Exchange has complied with the
above-listed conditions during the pilot.
In meeting them, the Exchange has set
up mechanisms that protect the
independence of the Exchange’s
regulatory responsibility with respect to
DE Route, as well as demonstrate that
DE Route cannot use any information
that it may have because of its affiliation
with the Exchange to its advantage.
Since the Exchange has met all the
above-listed obligations and conditions,
it now seeks permanent approval of the
Exchange and DE Route’s inbound
routing relationship. Upon approval of
the proposed rule change, the Exchange
will continue to comply with the
obligations and conditions as set forth
in proposed EDGX Rule 2.12.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the Act.7
Specifically, the proposal is consistent
with Section 6(b)(5) of the Act,8 because
it would promote just and equitable
principles of trade, remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system.
Specifically, the proposed rule change
will allow the Exchange to continue
receiving inbound routes of equities
orders from DE Route acting in its
capacity as a facility of EDGA, in a
manner consistent with prior approvals
and established protections. The
Exchange believes that meeting the
6 As
defined in EDGX Rule 1.5(n).
U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
7 15
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
31995
commitments established during the
pilot program demonstrates that the
Exchange has mechanisms that protect
the independence of the Exchange’s
regulatory responsibility with respect to
DE Route, as well as demonstrates that
DE Route cannot use any information
that it may have because of its affiliation
with the Exchange to its advantage.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change does not impose
any burden on intermarket or
intramarket competition as it would
allow the Exchange to have a permanent
inbound router consistent with its
competitors.9
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 written
comments from its Members or other
interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will: (A) By
order approve or disapprove such
proposed rule change, or (B) institute
proceedings to determine whether the
proposed rule change should be
disapproved.
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.
9 See Securities Exchange Act Release No. 65453
(September 30, 2011), 76 FR 62122 (October 6,
2011) (SR–NYSE–2011–45); Securities Exchange
Act Release No. 64090 (March 17, 2011), 76 FR
16462 (March 23, 2011) (SR–BX–2011–007);
Securities Exchange Act Release No. 66807 (April
13, 2012), 77 FR 23300 (April 18, 2012) (SR–BYX–
2012–006); Securities Exchange Act Release No.
66808 (April 13, 2012), 77 FR 23294 (April 18,
2012) (SR–BATS–2012–013).
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31996
Federal Register / Vol. 78, No. 102 / Tuesday, May 28, 2013 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
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–EDGX–2013–17 on the
subject line.
[Release No. 34–69613; File No. SR–EDGA–
2013–13]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing of
Proposed Rule Change Relating to the
EDGA Exchange, Inc.’s Routing Broker
Dealer, as Described in EDGA Rule
2.12(b)
May 21, 2013.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
mstockstill on DSK4VPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–EDGX–2013–17. 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 will also 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–EDGX–
2013–17 and should be submitted on or
before June 18, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–12533 Filed 5–24–13; 8:45 am]
BILLING CODE 8011–01–P
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 16,
2013, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) 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 self-regulatory
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 make
permanent the existing pilot program
that permits the Exchange’s inbound
router, as described in Rule 2.12(b), to
receive inbound routes of equities
orders through Direct Edge ECN LLC
d/b/a DE Route (‘‘DE Route’’), the
Exchange’s routing broker dealer, from
EDGX Exchange, Inc. (‘‘EDGX’’). 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
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,
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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
10 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
17:46 May 24, 2013
Jkt 229001
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Currently, DE Route is the approved
outbound order routing facility of
EDGX.4 The Exchange has been
authorized to receive inbound routes of
equities orders by DE Route from EDGX.
The Exchange’s authority to receive
inbound routes of equities orders by DE
Route from EDGX is currently subject to
a pilot period of twelve months, ending
June 30, 2013.5 The Exchange hereby
seeks permanent approval to permit the
Exchange to accept inbound orders that
DE Route routes in its capacity as a
facility of EDGX. This is reflected in the
proposed amendment to EDGA Rule
2.12(b).
Under the pilot, the Exchange is
committed to the following obligations
and conditions:
• The Exchange shall: (a) Enter into a
plan pursuant to Rule 17d–2 under the
Exchange Act with a non-affiliated selfregulatory organization (‘‘SRO’’) to
relieve the Exchange of regulatory
responsibilities for DE Route with
respect to rules that are common rules
between the Exchange and the SRO, and
(b) enter into a regulatory services
contract (‘‘Regulatory Contract’’) with a
non-affiliated SRO to perform regulatory
responsibilities for DE Route for unique
Exchange rules.
• The regulatory services contract
shall require the Exchange to provide
the non-affiliated SRO with information,
in an easily accessible manner,
regarding all exception reports, alerts,
complaints, trading errors,
cancellations, investigations, and
enforcement matters (collectively
‘‘Exceptions’’) in which DE Route is
identified as a participant that has
potentially violated Exchange or SEC
Rules, and shall require that the nonaffiliated SRO provide a report, at least
quarterly, to the Exchange quantifying
all Exceptions in which DE Route is
identified as a participant that has
potentially violated Exchange or SEC
rules.
• The Exchange, on behalf of Direct
Edge Holdings LLC, shall establish and
maintain procedures and internal
controls reasonably designed to ensure
that DE Route does not develop or
implement changes to its system on the
basis of non-public information
obtained as a result of its affiliation with
4 See Securities Exchange Act Release No. 61698
(March 12, 2010), 75 FR 13151 (March 18, 2010).
5 See Securities Exchange Act Release No. 66643
(March 22, 2012), 77 FR 18876 (March 28, 2012)
(SR–EDGA–2012–10).
E:\FR\FM\28MYN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 102 (Tuesday, May 28, 2013)]
[Notices]
[Pages 31994-31996]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12533]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69614; File No. SR-EDGX-2013-17]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing of Proposed Rule Change Relating to the EDGX Exchange, Inc.'s
Routing Broker Dealer, as Described in EDGX Rule 2.12(b)
May 21, 2013.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on May 16, 2013, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 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\ 15 U.S.C. 78a.
\3\ 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 make permanent the existing pilot program
that permits the Exchange's inbound router, as described in Rule
2.12(b), to receive inbound routes of equities orders through Direct
Edge ECN LLC d/b/a DE Route (``DE Route''), the Exchange's routing
broker dealer, from EDGA Exchange, Inc. (``EDGA''). All of the changes
described herein are applicable to EDGX Members. The text of the
proposed rule change is available on the Exchange's Internet Web site
at www.directedge.com, at the Exchange's principal office, and at the
Public Reference Room of the Commission.
[[Page 31995]]
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
Currently, DE Route is the approved outbound order routing facility
of EDGA.\4\ The Exchange has been authorized to receive inbound routes
of equities orders by DE Route from EDGA. The Exchange's authority to
receive inbound routes of equities orders by DE Route from EDGA is
currently subject to a pilot period of twelve months, ending June 30,
2013.\5\ The Exchange hereby seeks permanent approval to permit the
Exchange to accept inbound orders that DE Route routes in its capacity
as a facility of EDGA. This is reflected in the proposed amendment to
EDGX Rule 2.12(b).
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 61698 (March 12,
2010), 75 FR 13151 (March 18, 2010).
\5\ See Securities Exchange Act Release No. 66644 (March 22,
2012), 77 FR 18877 (March 28, 2012) (SR-EDGX-2012-09).
---------------------------------------------------------------------------
Under the pilot, the Exchange is committed to the following
obligations and conditions:
The Exchange shall: (a) Enter into a plan pursuant to Rule
17d-2 under the Exchange Act with a non-affiliated self-regulatory
organization (``SRO'') to relieve the Exchange of regulatory
responsibilities for DE Route with respect to rules that are common
rules between the Exchange and the SRO, and (b) enter into a regulatory
services contract (``Regulatory Contract'') with a non-affiliated SRO
to perform regulatory responsibilities for DE Route for unique Exchange
rules.
The regulatory services contract shall require the
Exchange to provide the non-affiliated SRO with information, in an
easily accessible manner, regarding all exception reports, alerts,
complaints, trading errors, cancellations, investigations, and
enforcement matters (collectively ``Exceptions'') in which DE Route is
identified as a participant that has potentially violated Exchange or
SEC Rules, and shall require that the non-affiliated SRO provide a
report, at least quarterly, to the Exchange quantifying all Exceptions
in which DE Route is identified as a participant that has potentially
violated Exchange or SEC rules.
The Exchange, on behalf of Direct Edge Holdings LLC, shall
establish and maintain procedures and internal controls reasonably
designed to ensure that DE Route does not develop or implement changes
to its system on the basis of non-public information obtained as a
result of its affiliation with the Exchange until such information is
available generally to similarly situated Members \6\ in connection
with the provision of inbound order routing to the Exchange.
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\6\ As defined in EDGX Rule 1.5(n).
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The Exchange has complied with the above-listed conditions during
the pilot. In meeting them, the Exchange has set up mechanisms that
protect the independence of the Exchange's regulatory responsibility
with respect to DE Route, as well as demonstrate that DE Route cannot
use any information that it may have because of its affiliation with
the Exchange to its advantage. Since the Exchange has met all the
above-listed obligations and conditions, it now seeks permanent
approval of the Exchange and DE Route's inbound routing relationship.
Upon approval of the proposed rule change, the Exchange will continue
to comply with the obligations and conditions as set forth in proposed
EDGX Rule 2.12.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\7\ Specifically, the
proposal is consistent with Section 6(b)(5) of the Act,\8\ because it
would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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Specifically, the proposed rule change will allow the Exchange to
continue receiving inbound routes of equities orders from DE Route
acting in its capacity as a facility of EDGA, in a manner consistent
with prior approvals and established protections. The Exchange believes
that meeting the commitments established during the pilot program
demonstrates that the Exchange has mechanisms that protect the
independence of the Exchange's regulatory responsibility with respect
to DE Route, as well as demonstrates that DE Route cannot use any
information that it may have because of its affiliation with the
Exchange to its advantage.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change does
not impose any burden on intermarket or intramarket competition as it
would allow the Exchange to have a permanent inbound router consistent
with its competitors.\9\
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\9\ See Securities Exchange Act Release No. 65453 (September 30,
2011), 76 FR 62122 (October 6, 2011) (SR-NYSE-2011-45); Securities
Exchange Act Release No. 64090 (March 17, 2011), 76 FR 16462 (March
23, 2011) (SR-BX-2011-007); Securities Exchange Act Release No.
66807 (April 13, 2012), 77 FR 23300 (April 18, 2012) (SR-BYX-2012-
006); Securities Exchange Act Release No. 66808 (April 13, 2012), 77
FR 23294 (April 18, 2012) (SR-BATS-2012-013).
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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 written comments from its Members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or (B)
institute proceedings to determine whether the proposed rule change
should be disapproved.
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.
[[Page 31996]]
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-EDGX-2013-17 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-EDGX-2013-17. 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 will also 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-EDGX-2013-17 and should be
submitted on or before June 18, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12533 Filed 5-24-13; 8:45 am]
BILLING CODE 8011-01-P
