Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend Footnote 4 of the Exchange's Fee Schedule To Permit Members To Designate Their Retail Orders To Be Identified as Retail on the EDGX Book Feed, 24463-24465 [2014-09809]
Download as PDF
<![CDATA[
Federal Register / Vol. 79, No. 83 / Wednesday, April 30, 2014 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
mstockstill on DSK4VPTVN1PROD with NOTICES
Extension:
Rule 17Ad–3(b); SEC File No. 270–424;
OMB Control No. 3235–0473.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17Ad–3(b) (17 CFR
240.17Ad–3(b)), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17Ad–3(b) requires registered
transfer agents to send a copy of the
written notice required under Rule
17Ad–2(c), (d), and (h) to the chief
executive officer of each issuer for
which the transfer agent acts when it
has failed to turnaround at least 75% of
all routine items in accordance with the
requirements of Rule 17Ad–2(a), or to
process at least 75% of all items in
accordance with the requirements of
Rule 17Ad–2(b), for two consecutive
months. The issuer may use the
information contained in the notices to:
(1) Provide an early warning to the
issuer of the transfer agent’s noncompliance with the Commission’s
minimum performance standards
regarding registered transfer agents; and
(2) assure that the issuer is aware of
problems and poor performance with
respect to the transfer agents that are
servicing the issuer’s securities. If the
issuer does not receive notice of a
registered transfer agent’s failure to
comply with the Commission’s
minimum performance standards then
the issuer will be unable to take
remedial action to correct the problem
or to find another registered transfer
agent. Pursuant to Rule 17Ad–3(b), a
transfer agent that has already filed a
Notice of Non-Compliance with the
Commission pursuant to Rule 17Ad–2
will only be required to send a copy of
that notice to issuers for which it acts
when that transfer agent fails to
turnaround 75% of all routine items or
to process 75% of all items.
The Commission estimates that only
two transfer agents will meet the
requirements of Rule 17Ad–3(b). If a
VerDate Mar<15>2010
17:41 Apr 29, 2014
Jkt 232001
transfer agent fails to meet those
requirements under 17Ad–3(b), it would
simply send a copy of the notice that
had already been produced for the
Commission. The Commission estimates
the requirement will take each
respondent approximately one hour to
complete, for a total annual estimate
burden of two hours at an internal labor
costs cost of approximately $60.00 an
hour. There are no external labor costs
associated with sending the notice to
issuers.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Thomas Bayer, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 24, 2014.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09811 Filed 4–29–14; 8:45 am]
BILLING CODE 8011–01–P
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72016; File No. SR–EDGX–
2014–13]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing of
Proposed Rule Change To Amend
Footnote 4 of the Exchange’s Fee
Schedule To Permit Members To
Designate Their Retail Orders To Be
Identified as Retail on the EDGX Book
Feed
April 24, 2014.
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 April 17,
2014, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Footnote 4 of its Fee Schedule to permit
Members to designate that their Retail
Orders be identified as Retail on the
EDGX Book Feed. 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
2 17
Frm 00093
Fmt 4703
Sfmt 4703
24463
E:\FR\FM\30APN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
30APN1
24464
Federal Register / Vol. 79, No. 83 / Wednesday, April 30, 2014 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
mstockstill on DSK4VPTVN1PROD with NOTICES
The Exchange proposes to amend
Footnote 4 of its Fee Schedule to permit
Members to designate that their Retail
Orders be identified as Retail on the
EDGX Book Feed. Footnote 4 of the
Exchange’s Fee Schedule defines a
Retail Order 3 and provides an
attestation requirement 4 that Members
must complete to send Retail Orders to
the Exchange. Footnote 4 of the
Exchange’s Fee Schedule also provides
that Members may designate orders as
Retail Orders on an order-by-order basis
or a port level basis by designating
particular FIX ports as Retail Order
Ports.5
Currently, Members may elect that
their display-eligible orders entered into
the Exchange utilize Attributable
Orders 6 to include their market
participant identifier (‘‘MPID’’) with
their published quotations on the EDGX
Book Feed. The Exchange now proposes
to amend Footnote 4 of its Fee Schedule
to permit Members to designate that
their Retail Orders be identified as
Retail on the EDGX Book Feed, rather
3 A Retail Order is defined as (i) an agency order
or riskless principal order that meets the criteria of
FINRA Rule 5320.03 that originates from a natural
person; (ii) is submitted to EDGX by a Member,
provided that no change is made to the terms of the
order; and (iii) the order does not originate from a
trading algorithm or any other computerized
methodology. See Footnote 4 of the Exchange’s Fee
Schedule available at https://www.directedge.com/
Trading/EDGXFeeSchedule.aspx; Securities
Exchange Act Release No. 68310 (November 28,
2012), 77 FR 71860 (December 4, 2012) (SR–EDGX–
2012–47) (Notice of Filing and Immediate
Effectiveness); Securities Exchange Act Release No.
69378 (April 15, 2013), 78 FR 23617 (April 19,
2013) (SR–EDGX–2013–13) (Notice of Filing and
Immediate Effectiveness).
4 Members must submit a signed written
attestation, in a form prescribed by the Exchange,
that they have implemented policies and
procedures that are reasonably designed to ensure
that substantially all orders designated by the
Member as a ‘‘Retail Order’’ comply with the above
requirements. See Footnote 4 of the Exchange’s Fee
Schedule available at https://www.directedge.com/
Trading/EDGXFeeSchedule.aspx; Securities
Exchange Act Release No. 68310 (November 28,
2012), 77 FR 71860 (December 4, 2012) (SR–EDGX–
2012–47) (Notice of Filing and Immediate
Effectiveness). See also Securities Exchange Act
Release No. 69852 (June 25, 2013), 78 FR 39420
(July 1, 2013) (SR–EDGX–2013–20) (Notice of Filing
and Immediate Effectiveness).
5 See Securities Exchange Act Release No. 68554
(December 31, 2012), 78 FR 966 (January 7, 2013)
(SR–EDGX–2012–48) (Notice of Filing and
Immediate Effectiveness).
6 An Attributable Order is defined as, ‘‘[a]n order
that is designated for display (price and size)
including the Member’s market participant
identifier (‘MPID’).’’ See Rule 11.5(c)(18).
VerDate Mar<15>2010
17:41 Apr 29, 2014
Jkt 232001
than by their MPID.7 A Member may
elect that their Retail Orders be
identified as Retail on an order-by-order
basis or instruct the Exchange to
identify all its Retail Orders as Retail on
a port-by-port basis where that port is
also designated as a Retail Order Port.
However, if a Member instructs the
Exchange to identify all its orders as
Retail on a Retail Order Port, it will not
be able to designate any Retail Order
from that port as an Attributable Order
or as a Non-Attributable Order.8
Implementation Date
The Exchange will announce the
effective date of the proposed rule
change in a Trading Notice to be
published no later than 30 days
following approval of the proposed rule
change by the Commission.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,10 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system.
The Exchange believes that the
proposal will benefit market
participants and help to promote
transparency by providing additional
information regarding quotations
displayed on the Exchange and
disseminated via the EDGX Book Feed.
Specifically, any Member who satisfies
the requirement under Footnote 4 of the
Fee Schedule that wishes to disclose via
the EDGX Book Feed that their order is
a Retail Order will be permitted to do
so, and such retail quotations will be
analogous to identified trading interest
in other contexts.11 The proposal also
promotes transparency by disseminating
7 A Member’s decision on whether to identify
their Retail Order as Retail under the proposed rule
change will not impact that Member’s eligibility to
qualify for a rebate under the Retail Order Tier
included in Footnote 4 of the Exchange’s Fee
Schedule.
8 A Non-Attributable Order is defined as ‘‘[a]n
order that is designated for display (price and size)
on an anonymous basis by the Exchange. See Rule
11.5(c)(19).
9 15 U.S.C. 78f.
10 15 U.S.C. 78f(b)(5).
11 For example, under the New York Stock
Exchange, Inc.’s (‘‘NYSE’’) Retail Liquidity
Program, when there is a Retail Price Improvement
Order in a particular security, the NYSE
disseminates an indicator, known as the Retail
Liquidity Identifier. See NYSE Rule 107C(j). See
also NYSE MKT LLC (‘‘NYSE MKT’’) Rule 107C(j);
NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule 7.44(j).
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
additional order information from
Members who may otherwise designate
their order as Non-Attributable, and
thereby not include their MPID with
their published quote on the EDGX
Book Feed. As a result, the proposal will
provide Members additional visibility
into the types of orders they may
interact with when an order is identified
as a Retail Order. The Exchange also
believes that the proposed rule change
is reasonable, equitable and not unfairly
discriminatory because it would
encourage Members who wish to
execute against Retail Orders to send
additional orders to the Exchange. For
example, the Exchange conducted a
study of its execution data from January
1, 2014 to March 31, 2014, which
indicated that Members who represent
Retail Orders and utilize Attributable
Orders to include their MPID with their
published quote on the EDGX Book
Feed received an 18% higher execution
rate than Members who represent Retail
Orders that elected not to include their
MPID on the EDGX Book Feed via the
use of a Non-Attributable Order.12
Therefore, the Exchange believes the
increased liquidity would potentially
stimulating further price competition for
Retail Orders, deepening the Exchange’s
liquidity pool, supporting the quality of
price discovery, and promoting market
transparency.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes its proposed
amendments to its Fee Schedule would
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes that the
proposed amendment will not burden
intramarket competition because the
ability to designate Retail Orders to be
identified as Retail on the EDGX Book
Feed, rather than by their MPID, would
be open to all Members that wish to
send Retail Orders to the Exchange. The
Exchange believes the proposed rule
change would increase intermarket
competition by identifying orders as
Retail via the EDGX Book Feed would
enable the Exchange to better compete
with other exchanges that offer similar
12 The Exchange compared the execution rates of
Attributed Orders to Non-Attributed Orders
submitted by Members whose primary business is
representing retail customers or who designate their
orders as Retail Orders for purposes of Footnote 4
of the Exchange’s Fee Schedule. The Exchange
calculated the execution rate by dividing the total
executed quantity by the total order quantity for
buy orders with a limit price greater than or equal
to the National Best Bid (‘‘NBB’’) and less than
National Best Offer (‘‘NBO’’) and sell orders with
limit price greater than the NBB and less than or
equal to the NBO.
E:\FR\FM\30APN1.SGM
30APN1
Federal Register / Vol. 79, No. 83 / Wednesday, April 30, 2014 / Notices
retail order programs.13 The Exchange
believes that the amendment, by
increasing the amount of disseminated
information regarding Retail Orders,
will increase the level of competition
around retail executions resulting in
better prices for retail investors.
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
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.
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–EDGX–
2014–13, and should be submitted on or
before May 21, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09809 Filed 4–29–14; 8:45 am]
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–2014–13 on the subject line.
mstockstill on DSK4VPTVN1PROD with NOTICES
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Proposed Rule Change Relating to the
Listing and Trading of the Shares of
the Reality Shares NASDAQ–100
Isolated Dividend Growth Index ETF of
the Reality Shares ETF Trust Under
Rule 5705
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–EDGX–2014–13. 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
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72014; File No. SR–
NASDAQ–2014–038]
April 24, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 10,
2014, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
13 Id.
VerDate Mar<15>2010
17:41 Apr 29, 2014
Jkt 232001
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
24465
been prepared by NASDAQ. 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
NASDAQ proposes to list and trade
the shares of the Reality Shares
NASDAQ–100 Isolated Dividend
Growth Index ETF (the ‘‘Fund’’) of the
Reality Shares ETF Trust (the ‘‘Trust’’)
under Rule 5705 (Exchange Traded
Funds: Portfolio Depository Receipts
and Index Fund Shares).3 The shares of
the Fund are collectively referred to
herein as the ‘‘Shares.’’
The text of the proposed rule change
is available at https://
nasdaq.cchwallstreet.com/, at
NASDAQ’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ included statements
concerning the purpose of, and basis for,
the proposed rule change. The text of
these statements may be examined at
the places specified in Item III below,
and is set forth in Sections A, B, and C
below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade the Shares of the Fund under
NASDAQ Rule 5705(b), which governs
the listing and trading of Index Fund
Shares 4 on the Exchange. The Fund is
an exchange-traded fund (‘‘ETF’’) which
seeks to track the performance of an
underlying index, as discussed herein.5
3 The Commission approved NASDAQ’s Rule
5705, as well as Rule 5735 regarding managed fund
shares, in Securities Exchange Act Release No.
57962 (June 13, 2008), 73 FR 35175 (June 20, 2008)
(SR–NASDAQ–2008–039).
4 Index Fund Shares that are issued by an openend investment company and listed and traded on
the Exchange under NASDAQ Rule 5705 seek to
provide investment results that correspond
generally to the price and yield performance of a
specific foreigh or domestic stock index, fixed
income securities index or combination thereof. See
Rule 5705(b)(1)(A).
5 The Exchange notes that its proposal to list
shares of the Fund which tracks the performance of
an index of U.S. exchange listed options is similar
to the proposal and resultant order issued to the
NYSE ARCA to list and trade under NYSE Arca
Equities Rule 5.2(j)(3) (which is similar to NASDAQ
Rule 5705(b)) Investment Company Units based on
Continued
E:\FR\FM\30APN1.SGM
30APN1
]]>Agencies
[Federal Register Volume 79, Number 83 (Wednesday, April 30, 2014)]
[Notices]
[Pages 24463-24465]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09809]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72016; File No. SR-EDGX-2014-13]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing of Proposed Rule Change To Amend Footnote 4 of the Exchange's
Fee Schedule To Permit Members To Designate Their Retail Orders To Be
Identified as Retail on the EDGX Book Feed
April 24, 2014.
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 April 17, 2014, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 Footnote 4 of its Fee Schedule to
permit Members to designate that their Retail Orders be identified as
Retail on the EDGX Book Feed. 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.
[[Page 24464]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Footnote 4 of its Fee Schedule to
permit Members to designate that their Retail Orders be identified as
Retail on the EDGX Book Feed. Footnote 4 of the Exchange's Fee Schedule
defines a Retail Order \3\ and provides an attestation requirement \4\
that Members must complete to send Retail Orders to the Exchange.
Footnote 4 of the Exchange's Fee Schedule also provides that Members
may designate orders as Retail Orders on an order-by-order basis or a
port level basis by designating particular FIX ports as Retail Order
Ports.\5\
---------------------------------------------------------------------------
\3\ A Retail Order is defined as (i) an agency order or riskless
principal order that meets the criteria of FINRA Rule 5320.03 that
originates from a natural person; (ii) is submitted to EDGX by a
Member, provided that no change is made to the terms of the order;
and (iii) the order does not originate from a trading algorithm or
any other computerized methodology. See Footnote 4 of the Exchange's
Fee Schedule available at https://www.directedge.com/Trading/EDGXFeeSchedule.aspx; Securities Exchange Act Release No. 68310
(November 28, 2012), 77 FR 71860 (December 4, 2012) (SR-EDGX-2012-
47) (Notice of Filing and Immediate Effectiveness); Securities
Exchange Act Release No. 69378 (April 15, 2013), 78 FR 23617 (April
19, 2013) (SR-EDGX-2013-13) (Notice of Filing and Immediate
Effectiveness).
\4\ Members must submit a signed written attestation, in a form
prescribed by the Exchange, that they have implemented policies and
procedures that are reasonably designed to ensure that substantially
all orders designated by the Member as a ``Retail Order'' comply
with the above requirements. See Footnote 4 of the Exchange's Fee
Schedule available at https://www.directedge.com/Trading/EDGXFeeSchedule.aspx; Securities Exchange Act Release No. 68310
(November 28, 2012), 77 FR 71860 (December 4, 2012) (SR-EDGX-2012-
47) (Notice of Filing and Immediate Effectiveness). See also
Securities Exchange Act Release No. 69852 (June 25, 2013), 78 FR
39420 (July 1, 2013) (SR-EDGX-2013-20) (Notice of Filing and
Immediate Effectiveness).
\5\ See Securities Exchange Act Release No. 68554 (December 31,
2012), 78 FR 966 (January 7, 2013) (SR-EDGX-2012-48) (Notice of
Filing and Immediate Effectiveness).
---------------------------------------------------------------------------
Currently, Members may elect that their display-eligible orders
entered into the Exchange utilize Attributable Orders \6\ to include
their market participant identifier (``MPID'') with their published
quotations on the EDGX Book Feed. The Exchange now proposes to amend
Footnote 4 of its Fee Schedule to permit Members to designate that
their Retail Orders be identified as Retail on the EDGX Book Feed,
rather than by their MPID.\7\ A Member may elect that their Retail
Orders be identified as Retail on an order-by-order basis or instruct
the Exchange to identify all its Retail Orders as Retail on a port-by-
port basis where that port is also designated as a Retail Order Port.
However, if a Member instructs the Exchange to identify all its orders
as Retail on a Retail Order Port, it will not be able to designate any
Retail Order from that port as an Attributable Order or as a Non-
Attributable Order.\8\
---------------------------------------------------------------------------
\6\ An Attributable Order is defined as, ``[a]n order that is
designated for display (price and size) including the Member's
market participant identifier (`MPID').'' See Rule 11.5(c)(18).
\7\ A Member's decision on whether to identify their Retail
Order as Retail under the proposed rule change will not impact that
Member's eligibility to qualify for a rebate under the Retail Order
Tier included in Footnote 4 of the Exchange's Fee Schedule.
\8\ A Non-Attributable Order is defined as ``[a]n order that is
designated for display (price and size) on an anonymous basis by the
Exchange. See Rule 11.5(c)(19).
---------------------------------------------------------------------------
Implementation Date
The Exchange will announce the effective date of the proposed rule
change in a Trading Notice to be published no later than 30 days
following approval of the proposed rule change by the Commission.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and to remove
impediments to and perfect the mechanism of a free and open market and
a national market system.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposal will benefit market
participants and help to promote transparency by providing additional
information regarding quotations displayed on the Exchange and
disseminated via the EDGX Book Feed. Specifically, any Member who
satisfies the requirement under Footnote 4 of the Fee Schedule that
wishes to disclose via the EDGX Book Feed that their order is a Retail
Order will be permitted to do so, and such retail quotations will be
analogous to identified trading interest in other contexts.\11\ The
proposal also promotes transparency by disseminating additional order
information from Members who may otherwise designate their order as
Non-Attributable, and thereby not include their MPID with their
published quote on the EDGX Book Feed. As a result, the proposal will
provide Members additional visibility into the types of orders they may
interact with when an order is identified as a Retail Order. The
Exchange also believes that the proposed rule change is reasonable,
equitable and not unfairly discriminatory because it would encourage
Members who wish to execute against Retail Orders to send additional
orders to the Exchange. For example, the Exchange conducted a study of
its execution data from January 1, 2014 to March 31, 2014, which
indicated that Members who represent Retail Orders and utilize
Attributable Orders to include their MPID with their published quote on
the EDGX Book Feed received an 18% higher execution rate than Members
who represent Retail Orders that elected not to include their MPID on
the EDGX Book Feed via the use of a Non-Attributable Order.\12\
Therefore, the Exchange believes the increased liquidity would
potentially stimulating further price competition for Retail Orders,
deepening the Exchange's liquidity pool, supporting the quality of
price discovery, and promoting market transparency.
---------------------------------------------------------------------------
\11\ For example, under the New York Stock Exchange, Inc.'s
(``NYSE'') Retail Liquidity Program, when there is a Retail Price
Improvement Order in a particular security, the NYSE disseminates an
indicator, known as the Retail Liquidity Identifier. See NYSE Rule
107C(j). See also NYSE MKT LLC (``NYSE MKT'') Rule 107C(j); NYSE
Arca, Inc. (``NYSE Arca'') Rule 7.44(j).
\12\ The Exchange compared the execution rates of Attributed
Orders to Non-Attributed Orders submitted by Members whose primary
business is representing retail customers or who designate their
orders as Retail Orders for purposes of Footnote 4 of the Exchange's
Fee Schedule. The Exchange calculated the execution rate by dividing
the total executed quantity by the total order quantity for buy
orders with a limit price greater than or equal to the National Best
Bid (``NBB'') and less than National Best Offer (``NBO'') and sell
orders with limit price greater than the NBB and less than or equal
to the NBO.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes its proposed amendments to its Fee Schedule
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed amendment will not burden intramarket
competition because the ability to designate Retail Orders to be
identified as Retail on the EDGX Book Feed, rather than by their MPID,
would be open to all Members that wish to send Retail Orders to the
Exchange. The Exchange believes the proposed rule change would increase
intermarket competition by identifying orders as Retail via the EDGX
Book Feed would enable the Exchange to better compete with other
exchanges that offer similar
[[Page 24465]]
retail order programs.\13\ The Exchange believes that the amendment, by
increasing the amount of disseminated information regarding Retail
Orders, will increase the level of competition around retail executions
resulting in better prices for retail investors.
---------------------------------------------------------------------------
\13\ Id.
---------------------------------------------------------------------------
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
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. 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-2014-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGX-2014-13. 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-EDGX-2014-13, and should be
submitted on or before May 21, 2014.
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09809 Filed 4-29-14; 8:45 am]
BILLING CODE 8011-01-P
