Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange, 8380-8383 [2015-03078]

Download as PDF 8380 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–EDGA– 2015–05, and should be submitted on or before March 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Brent J. Fields, Secretary. [FR Doc. 2015–03077 Filed 2–13–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74238; File No. SR–EDGA– 2015–07] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange tkelley on DSK3SPTVN1PROD with NOTICES February 10, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 30, 2015, 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 Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the 13 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 proposed rule change effective upon filing with the Commission. 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 filed a proposal to amend its fees and rebates applicable to Members 5 of the Exchange pursuant to EDGA Rule 15.1(a) and (c) (‘‘Fee Schedule’’) to: (i) Amend the definitions of ADV and TCV to remove a provision to exclude shares on each day from January 12, 2015 up to and including January 16, 2015; (ii) update the description of fee code D to include routing using the RDOT routing strategy; (iii) delete fee codes M and U, as well as remove the ROLF routing strategy from Footnote 7, all of which route to LavaFlow; and (iv) make a number of non-substantive and organizational amendments. The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, 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, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. 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: (i) Amend the definitions of ADV and TCV to remove a provision to exclude shares on each day from January 12, 2015 up to and including January 16, 2015; (ii) update the description of fee code D to include routing using the RDOT routing 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer, or any person associated with a registered broker or dealer, that has been admitted to membership in the Exchange. A Member will have the status of a ‘‘member’’ of the Exchange as that term is defined in Section 3(a)(3) of the Act.’’ See Exchange Rule 1.5(n). PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 strategy; (iii) delete fee codes M and U, as well as remove the ROLF routing strategy from Footnote 7, all of which route to LavaFlow; and (iv) make a number of non-substantive and organizational amendments. ADV and TCV Definitions Earlier this year, the Exchange and its affiliate, EDGX Exchange, Inc. (‘‘EDGX’’) received approval to effect a merger (the ‘‘Merger’’) of the Exchange’s parent company, Direct Edge Holdings LLC, with BATS Global Markets, Inc., the parent of BATS (together with BATS, EDGA and EDGX, the ‘‘BGM Affiliated Exchanges’’).6 In the context of the Merger, the BGM Affiliated Exchanges worked to migrate EDGX and EDGA onto the BATS technology platform, and align certain system functionality, retaining only intended differences between the BGM Affiliated Exchanges. The migration of EDGX and EDGA onto the BATS technology platform occurred during the week of January 12, 2015. Currently, the Exchange determines the tiered pricing that it will provide to Members according to the Exchange’s tiered pricing structure, which is based on the calculation of ADV 7 and/or average daily TCV.8 The Exchange currently excludes from its calculation of ADV and TCV those shares traded on each day from January 12, 2015 up to and including January 16, 2015 in order to avoid penalizing Members that, because of the technology migration that occurred during the week of January 12, 2015, did not participate on the Exchange during that week to the extent that they might have otherwise participated.9 As described above, such exclusion only applied to tier calculations in January, meaning that the language has no effect moving forward. As such, the Exchange proposes to remove the provisions from the definitions of ADV and TCV that exclude trading activity that occurred on each day from January 12, 2015 up 6 See Securities Exchange Act Release No. 71449 (January 30, 2014), 79 FR 6961 (February 5, 2014) (SR–EDGX–2013–43; SR–EDGA–2013–34). 7 As provided in the Fee Schedule, ‘‘ADV’’ is currently defined as ‘‘average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. ADV is calculated on a monthly basis.’’ 8 As provided in the Fee Schedule, ‘‘TCV’’ is currently defined as ‘‘total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply.’’ 9 See Securities Exchange Act Release Nos. 74025 (January 9, 2015), 80 FR 2154 (January 15, 2015) (SR–EDGA–2014–36); and 74021 [sic] (January 9, 2015), 80 FR 2142 (January 15, 2015) (SR–EDGX– 2014–37). E:\FR\FM\17FEN1.SGM 17FEN1 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices to and including January 16, 2015 as the exclusion period has passed and these provisions are no longer necessary. Fee Code D Currently, fee code D is appended to orders routed to the NYSE. Orders yielding fee code D are charged a fee of $0.0027 per share in securities priced at or above $1 and 0.30% of the dollar value of the trade in securities priced below $1. The Exchange proposes to amend the description of fee code D to include routing using the RDOT routing strategy, in addition to orders routed to the NYSE. RDOT is a routing option under which an order checks the System 10 for available shares and then is sent to destinations on the System routing table,11 which may include nonexchange destinations. If shares remain unexecuted after routing, they are sent to the New York Stock Exchange, Inc. (‘‘NYSE’’) and can be re-routed by the NYSE. Any remainder will be posted to the NYSE, unless otherwise instructed by the User.12 Historically, fee code D is appended by the System to orders routed using the RDOT routing strategy that are executed on a destination on the System routing table prior to reaching the NYSE as well as to those RDOT orders that remove liquidity from the NYSE. Therefore, the Exchange proposes to update the description of fee code D to make clear that it also includes orders routed using the RDOT routing strategy. The Exchange notes that fee code F is and will remain appended to orders routed using the RDOT routing strategy that add liquidity to NYSE. tkelley on DSK3SPTVN1PROD with NOTICES Fee Codes M and U, Footnote 7 The Exchange proposes to amend its Fee Schedule to delete fee code M, which routes to LavaFlow and adds liquidity, as well as fee code U, which routes to LavaFlow. The Exchange also proposes to amend Footnote 7 to remove references to the ROLF routing strategy, under which an order will check the Exchange for available shares and then will be sent to LavaFlow. These changes are being proposed in response to LavaFlow’s announcement that it will cease market operations and its last day of trading will be Friday, January 30, 2015. For orders yielding fee code M, 10 The term ‘‘System’’ is defined as ‘‘the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.’’ 11 The term ‘‘System routing table’’ refers to ‘‘the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them.’’ See Exchange Rule 11.11(g). 12 See Exchange Rule 11.11(g)(5). VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 the Exchange currently provides a rebate of $0.0024 per share in securities priced at or above $1.00 and no rebate in securities priced below $1.00. For orders yielding fee code U, the Exchange currently charges a fee of $0.0028 per share in securities priced at or above $1.00 and no fee in securities priced below $1.00. The rates for orders that yield fee codes M or U represent a pass through of the rate that BATS Trading, the Exchange’s affiliated routing broker-dealer, is subject to for routing orders to LavaFlow. As of February 2, 2015, the Exchange, via BATS Trading, will no longer be able to route orders to LavaFlow because it ceased operations, and, therefore, proposes to delete fee codes M and U, as well as references to the ROLF routing strategy in Footnote 7. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange also proposes to make two non-substantive and organizational changes to its Fee Schedule to provide greater clarity to Members on how the Exchange assesses fees and calculates rebates. The Exchange proposes to reorder the fee codes under the section entitled, Fee Codes and Associated Fees, as well as indicate the amount of the fees and rebates as five decimal points, rather than four decimal points, by adding a zero to the end of each fee and rebate, to reflect the order pricing format on the Exchange’s Web site. The Exchange notes that none of these changes amend any fee or rebate, nor do they alter the manner in which it assesses fees or calculates rebates. Implementation Date The Exchange proposes to implement these amendments to its Fee Schedule on February 2, 2015. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,13 in general, and furthers the objectives of Section 6(b)(4),14 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 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 13 15 14 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(4). Frm 00097 Fmt 4703 Sfmt 4703 8381 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. ADV and TCV Definitions The Exchange believes that its proposed amendments to the definitions of ADV and TCV to remove a provision to exclude shares during the week the Exchange is migrated onto BATS technology is reasonable because, as explained above, it is no longer necessary as the exclusion period has passed. The Exchange is not proposing to amend the thresholds a Member must achieve to become eligible for, or the dollar value associated with, the tiered rebates or fees. The initial proposal to exclude these trading days from the calculation of ADV and TCV was designed to provide Members additional time to monitor the migration of the Exchange onto BATS technology. In addition, the Exchange believes that the proposed changes to its Fee Schedule are equitably allocated among Exchange constituents and not unfairly discriminatory as the methodology for calculating ADV and TCV will apply equally to all Members. Fee Code D The Exchange believes that its proposal to update fee code D to also include order routed using the RDOT routing strategy represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. Historically, fee code D has been appended by the System to orders routed using the RDOT routing strategy that are executed on a destination on the System routing table prior to reaching the NYSE as well as to orders that that remove liquidity from NYSE. Therefore, the Exchange believes that updating fee code to specifically state that fee code D is appended to orders using the RDOT routing strategy would benefit Members by providing clear guidance in its Fee Schedule regarding which orders fee code D would be appended to. In addition, the Exchange believes that the proposed change to its Fee Schedule is equitably allocated among Exchange constituents and not unfairly discriminatory as the application of fee code D will apply equally to all Members who use the RDOT routing strategy. E:\FR\FM\17FEN1.SGM 17FEN1 8382 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices Fee Codes M and U, Footnote 7 The Exchange believes that its proposal to delete fee codes M and U in its Fee Schedule as well as remove references to the ROLF routing strategy from Footnote 7 represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. The proposed change is in response to LavaFlow’s announcement that it will cease market operations and its last day of trading will Friday, January 30, 2015. As of February 2, 2015, the Exchange, via BATS Trading, will no longer be able to route orders to LavaFlow and, therefore, proposes to remove fee codes M and U as well as a reference to the ROLF routing strategy in Footnote 7. The Exchange believes that the proposed amendments are intended to make the Fee Schedule clearer and less confusing for investors and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange believes that the nonsubstantive clarifying changes to its Fee Schedule are reasonable because they are designed to provide greater transparency to Members with regard to how the Exchange assesses fees and calculates rebates. The Exchange notes that none of the proposed nonsubstantive clarifying changes are designed to amend any fee, nor alter the manner in which it assesses fees or calculates rebates. These nonsubstantive and organizational changes to the Fee Schedule as intended to make the Fee Schedule clearer and less confusing for investors and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. tkelley on DSK3SPTVN1PROD with NOTICES 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 does not believe that the proposed change represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange’s competitors. VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. ADV and TCV Definitions The proposal to remove a provision to exclude shares from January 12, 2015 up to and including January 16, 2015 from the ADV and TCV calculations would not affect intermarket nor intramarket competition because it is no longer necessary as the exclusion period has passed. Fee Code D The Exchange believes that its proposal to update fee code D to also include order routed using the RDOT routing strategy would not affect intermarket nor intramarket competition because this change is not designed to amend any fee or rebate or alter the manner in which the Exchange assesses fees for orders yielding fee code D amend the orders to which fee code D applies. It is simply proposed to update the description of fee code D to make clear that it also includes orders routed using the RDOT routing strategy, in addition to orders routed to the NYSE. Fee Codes M and U, Footnote 7 The Exchange believes that its proposal to delete fee codes M and U and amend Footnote 7 would not affect intermarket nor intramarket competition because this change is not designed to amend any fee or rebate or alter the manner in which the Exchange assesses fees or calculates rebates. It is simply proposed in response to LavaFlow’s announcement that it will cease market operations and its last day of trading will be Friday, January 30, 2015. Non-Substantive and Organizational Changes to Fee Code and Associated Fees The Exchange believes that nonsubstantive and organizational changes to the Fee Schedule would not affect intermarket nor intramarket competition because none of these changes are designed to amend any fee or alter the manner in which the Exchange assesses fees or calculates rebates. These changes are intended to provide greater clarity to Members with regard to how the Exchange access fees and calculates rebates. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 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)(A) of the Act 15 and paragraph (f) of Rule 19b–4 thereunder.16 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–EDGA–2015–07 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–EDGA–2015–07. 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 15 15 16 17 E:\FR\FM\17FEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 17FEN1 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–EDGA– 2015–07, and should be submitted on or before March 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Brent J. Fields, Secretary. [FR Doc. 2015–03078 Filed 2–13–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74241; File No. SR–OCC– 2014–812] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of No Objection to Advance Notice Concerning Extended and Overnight Trading Sessions February 10, 2015. On December 12, 2014, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) advance notice SR–OCC–2014–812 (‘‘Advance Notice’’) 1 pursuant to Section 806(e)(1) of the Payment, Clearing, and Settlement Supervision Act of 2010 (‘‘Clearing Supervision Act’’) 2 and Rule 17 17 CFR 200.30–3(a)(12). initially filed a similar advance notice on September 17, 2014. Securities Exchange Act Release No. 73343 (October 14, 2014), 79 FR 62684 (October 20, 2014), (SR–OCC–2014–805). OCC withdrew that advance notice on October 28, 2104. Securities Exchange Act Release No. 73710 (December 1, 2014), 79 FR 72225 (December 5, 2014), (SR–OCC–2014–805). 2 12 U.S.C. 5465(e)(1). The Financial Stability Oversight Council designated OCC a systemically important financial market utility on July 18, 2012. See Financial Stability Oversight Council 2012 Annual Report, Appendix A, https:// www.treasury.gov/initiatives/fsoc/Documents/ 2012%20Annual%20Report.pdf. Therefore, OCC is required to comply with the Clearing Supervision tkelley on DSK3SPTVN1PROD with NOTICES 1 OCC VerDate Sep<11>2014 16:51 Feb 13, 2015 Jkt 235001 19b–4(n)(1)(i) under the Securities Exchange Act of 1934 (‘‘Exchange Act’’).3 The Advance Notice was published for comment in the Federal Register on January 22, 2015.4 The Commission did not receive any comments on the Advance Notice. This publication serves as a notice of no objection to the Advance Notice. I. Description of the Advance Notice Description of Change This advance notice was filed in connection with OCC’s proposed change to its operations concerning the clearance of confirmed trades executed in overnight trading sessions offered by exchanges for which OCC provides clearance and settlement services. OCC currently clears overnight trading activity for CBOE Futures Exchange, LLC (‘‘CFE’’).5 The total number of trades submitted to OCC from overnight trading sessions is nominal, typically less than 3,000 contracts per session. However, OCC has recently observed an industry trend whereby exchanges are offering overnight trading sessions beyond traditional hours. Exchanges offering overnight trading sessions have indicated to OCC that such sessions benefit market participants by providing additional price transparency and hedging opportunities for products traded in such sessions, which, in turn, promotes market stability.6 In light of this trend, OCC proposed to implement a framework for clearing trades executed in such sessions that includes: (1) Qualification criteria used to approve clearing members for overnight trading sessions, (2) systemic controls to identify trades executed during overnight trading sessions by clearing members not approved for such sessions, (3) enhancements to OCC’s overnight monitoring of trades submitted by exchanges during Act and file advance notices with the Commission. See 12 U.S.C. 5465(e). 3 17 CFR 240.19b–4(n)(1)(i). 4 See Securities Exchange Act Release No. 74073 (January 15, 2015), 80 FR 3287 (January 22, 2015) (SR–OCC–2014–812). OCC also filed the proposal contained in this advance notice as a proposed rule change under Section 19(b)(1) of the Act and Rule 19b–4 thereunder, which was published for comment in the Federal Register on December 30, 2014. 15 U.S.C. 78s(b)(1); 17 CFR 240.19b–4. See Securities Exchange Act Release No. 73907 (December 22, 2014), 79 FR 78543 (December 30, 2014) (SR–OCC–2014–24). The Commission did not receive any comments on the proposed rule change. 5 ELX Futures LP (‘‘ELX’’) previously submitted overnight trading activity to OCC, but currently does not submit such trades. OCC will re-evaluate ELX’s risk controls in the event ELX re-institutes its overnight trading sessions. 6 See CFE–2014–010 at https://cfe.cboe.com/ publish/CFErulefilings/SR-CFE-2014-010.pdf. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 8383 overnight trading sessions, (4) enhancements to OCC’s credit controls with respect to monitoring clearing members’ credit risk during overnight trading sessions, including procedures for contacting an exchange offering overnight trading sessions in order to invoke use of the exchange’s kill switch, and (5) taking appropriate disciplinary action against clearing members who attempt to clear during the overnight trading session without first obtaining requisite approvals. These changes (described in greater detail below) are designed to reduce and mitigate the risks associated with clearing trades executed in overnight trading sessions. In addition, the only products that will be eligible for clearing in overnight trading sessions are index options and index futures products. OCC’s framework for determining whether to provide clearing services for overnight trading sessions offered by an exchange is designed to work in conjunction with the risk controls of the exchange that offers overnight trading sessions. OCC will confirm an exchange’s risk controls as well as its staffing levels as they relate to overnight trading sessions to determine if OCC may reasonably rely on such risk controls to reduce the risk presented to OCC by the exchange’s overnight trading sessions. Such exchange risk controls will consist of: (1) Price reasonability checks, (2) controls to prevent orders from being executed beyond a certain percentage (determined by the exchange) from the initial execution price, (3) activity based protections which focus on risk beyond price, such as a high number of trades occurring in a set period of time, and (4) kill switch capabilities, which may be initiated by the exchange and can cancel all open quotes or all orders of a particular participant. OCC believes that confirming the existence of applicable pre-trade risk controls as well as overnight staffing at the relevant exchanges is essential to mitigating risks presented to OCC from overnight trading sessions.7 OCC believes that providing clearing services to exchanges offering such sessions is consistent with 7 Comparable controls are applied to futures and future option trades executed in overnight trading sessions currently cleared by OCC, although such controls have been implemented by clearing futures commission merchants (‘‘clearing FCMs’’) pursuant to Commodity Futures Trading Commission (‘‘CFTC’’) Regulation 1.73. This requires clearing FCMs to monitor for adherence to such controls during regular and overnight trading sessions. Some of these risk control measures are similar to those proposed by OCC for use in clearing securities trades in overnight trading sessions. For instance, OCC confirmed that CFE maintains kill switch capabilities. E:\FR\FM\17FEN1.SGM 17FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 31 (Tuesday, February 17, 2015)]
[Notices]
[Pages 8380-8383]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03078]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74238; File No. SR-EDGA-2015-07]

Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of the Exchange

February 10, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 30, 2015, 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 Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange filed a proposal to amend its fees and rebates
applicable to Members \5\ of the Exchange pursuant to EDGA Rule 15.1(a)
and (c) (``Fee Schedule'') to: (i) Amend the definitions of ADV and TCV
to remove a provision to exclude shares on each day from January 12,
2015 up to and including January 16, 2015; (ii) update the description
of fee code D to include routing using the RDOT routing strategy; (iii)
delete fee codes M and U, as well as remove the ROLF routing strategy
from Footnote 7, all of which route to LavaFlow; and (iv) make a number
of non-substantive and organizational amendments.
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\5\ The term ``Member'' is defined as ``any registered broker or
dealer, or any person associated with a registered broker or dealer,
that has been admitted to membership in the Exchange. A Member will
have the status of a ``member'' of the Exchange as that term is
defined in Section 3(a)(3) of the Act.'' See Exchange Rule 1.5(n).
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The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, 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, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

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: (i) Amend the definitions of ADV and TCV
to remove a provision to exclude shares on each day from January 12,
2015 up to and including January 16, 2015; (ii) update the description
of fee code D to include routing using the RDOT routing strategy; (iii)
delete fee codes M and U, as well as remove the ROLF routing strategy
from Footnote 7, all of which route to LavaFlow; and (iv) make a number
of non-substantive and organizational amendments.
ADV and TCV Definitions
Earlier this year, the Exchange and its affiliate, EDGX Exchange,
Inc. (``EDGX'') received approval to effect a merger (the ``Merger'')
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS
Global Markets, Inc., the parent of BATS (together with BATS, EDGA and
EDGX, the ``BGM Affiliated Exchanges'').\6\ In the context of the
Merger, the BGM Affiliated Exchanges worked to migrate EDGX and EDGA
onto the BATS technology platform, and align certain system
functionality, retaining only intended differences between the BGM
Affiliated Exchanges. The migration of EDGX and EDGA onto the BATS
technology platform occurred during the week of January 12, 2015.
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\6\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
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Currently, the Exchange determines the tiered pricing that it will
provide to Members according to the Exchange's tiered pricing
structure, which is based on the calculation of ADV \7\ and/or average
daily TCV.\8\ The Exchange currently excludes from its calculation of
ADV and TCV those shares traded on each day from January 12, 2015 up to
and including January 16, 2015 in order to avoid penalizing Members
that, because of the technology migration that occurred during the week
of January 12, 2015, did not participate on the Exchange during that
week to the extent that they might have otherwise participated.\9\ As
described above, such exclusion only applied to tier calculations in
January, meaning that the language has no effect moving forward. As
such, the Exchange proposes to remove the provisions from the
definitions of ADV and TCV that exclude trading activity that occurred
on each day from January 12, 2015 up

[[Page 8381]]

to and including January 16, 2015 as the exclusion period has passed
and these provisions are no longer necessary.
---------------------------------------------------------------------------

\7\ As provided in the Fee Schedule, ``ADV'' is currently
defined as ``average daily volume calculated as the number of shares
added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.''
\8\ As provided in the Fee Schedule, ``TCV'' is currently
defined as ``total consolidated volume calculated as the volume
reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.''
\9\ See Securities Exchange Act Release Nos. 74025 (January 9,
2015), 80 FR 2154 (January 15, 2015) (SR-EDGA-2014-36); and 74021
[sic] (January 9, 2015), 80 FR 2142 (January 15, 2015) (SR-EDGX-
2014-37).
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Fee Code D
Currently, fee code D is appended to orders routed to the NYSE.
Orders yielding fee code D are charged a fee of $0.0027 per share in
securities priced at or above $1 and 0.30% of the dollar value of the
trade in securities priced below $1. The Exchange proposes to amend the
description of fee code D to include routing using the RDOT routing
strategy, in addition to orders routed to the NYSE. RDOT is a routing
option under which an order checks the System \10\ for available shares
and then is sent to destinations on the System routing table,\11\ which
may include non-exchange destinations. If shares remain unexecuted
after routing, they are sent to the New York Stock Exchange, Inc.
(``NYSE'') and can be re-routed by the NYSE. Any remainder will be
posted to the NYSE, unless otherwise instructed by the User.\12\
Historically, fee code D is appended by the System to orders routed
using the RDOT routing strategy that are executed on a destination on
the System routing table prior to reaching the NYSE as well as to those
RDOT orders that remove liquidity from the NYSE. Therefore, the
Exchange proposes to update the description of fee code D to make clear
that it also includes orders routed using the RDOT routing strategy.
The Exchange notes that fee code F is and will remain appended to
orders routed using the RDOT routing strategy that add liquidity to
NYSE.
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\10\ The term ``System'' is defined as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.''
\11\ The term ``System routing table'' refers to ``the
proprietary process for determining the specific trading venues to
which the System routes orders and the order in which it routes
them.'' See Exchange Rule 11.11(g).
\12\ See Exchange Rule 11.11(g)(5).
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Fee Codes M and U, Footnote 7
The Exchange proposes to amend its Fee Schedule to delete fee code
M, which routes to LavaFlow and adds liquidity, as well as fee code U,
which routes to LavaFlow. The Exchange also proposes to amend Footnote
7 to remove references to the ROLF routing strategy, under which an
order will check the Exchange for available shares and then will be
sent to LavaFlow. These changes are being proposed in response to
LavaFlow's announcement that it will cease market operations and its
last day of trading will be Friday, January 30, 2015. For orders
yielding fee code M, the Exchange currently provides a rebate of
$0.0024 per share in securities priced at or above $1.00 and no rebate
in securities priced below $1.00. For orders yielding fee code U, the
Exchange currently charges a fee of $0.0028 per share in securities
priced at or above $1.00 and no fee in securities priced below $1.00.
The rates for orders that yield fee codes M or U represent a pass
through of the rate that BATS Trading, the Exchange's affiliated
routing broker-dealer, is subject to for routing orders to LavaFlow. As
of February 2, 2015, the Exchange, via BATS Trading, will no longer be
able to route orders to LavaFlow because it ceased operations, and,
therefore, proposes to delete fee codes M and U, as well as references
to the ROLF routing strategy in Footnote 7.
Non-Substantive and Organizational Changes to Fee Code and Associated
Fees
The Exchange also proposes to make two non-substantive and
organizational changes to its Fee Schedule to provide greater clarity
to Members on how the Exchange assesses fees and calculates rebates.
The Exchange proposes to reorder the fee codes under the section
entitled, Fee Codes and Associated Fees, as well as indicate the amount
of the fees and rebates as five decimal points, rather than four
decimal points, by adding a zero to the end of each fee and rebate, to
reflect the order pricing format on the Exchange's Web site. The
Exchange notes that none of these changes amend any fee or rebate, nor
do they alter the manner in which it assesses fees or calculates
rebates.
Implementation Date
The Exchange proposes to implement these amendments to its Fee
Schedule on February 2, 2015.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\13\ in general, and
furthers the objectives of Section 6(b)(4),\14\ 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 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.
---------------------------------------------------------------------------

\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

ADV and TCV Definitions
The Exchange believes that its proposed amendments to the
definitions of ADV and TCV to remove a provision to exclude shares
during the week the Exchange is migrated onto BATS technology is
reasonable because, as explained above, it is no longer necessary as
the exclusion period has passed. The Exchange is not proposing to amend
the thresholds a Member must achieve to become eligible for, or the
dollar value associated with, the tiered rebates or fees. The initial
proposal to exclude these trading days from the calculation of ADV and
TCV was designed to provide Members additional time to monitor the
migration of the Exchange onto BATS technology. In addition, the
Exchange believes that the proposed changes to its Fee Schedule are
equitably allocated among Exchange constituents and not unfairly
discriminatory as the methodology for calculating ADV and TCV will
apply equally to all Members.
Fee Code D
The Exchange believes that its proposal to update fee code D to
also include order routed using the RDOT routing strategy represents an
equitable allocation of reasonable dues, fees, and other charges among
Members and other persons using its facilities. Historically, fee code
D has been appended by the System to orders routed using the RDOT
routing strategy that are executed on a destination on the System
routing table prior to reaching the NYSE as well as to orders that that
remove liquidity from NYSE. Therefore, the Exchange believes that
updating fee code to specifically state that fee code D is appended to
orders using the RDOT routing strategy would benefit Members by
providing clear guidance in its Fee Schedule regarding which orders fee
code D would be appended to. In addition, the Exchange believes that
the proposed change to its Fee Schedule is equitably allocated among
Exchange constituents and not unfairly discriminatory as the
application of fee code D will apply equally to all Members who use the
RDOT routing strategy.

[[Page 8382]]

Fee Codes M and U, Footnote 7
The Exchange believes that its proposal to delete fee codes M and U
in its Fee Schedule as well as remove references to the ROLF routing
strategy from Footnote 7 represents an equitable allocation of
reasonable dues, fees, and other charges among Members and other
persons using its facilities. The proposed change is in response to
LavaFlow's announcement that it will cease market operations and its
last day of trading will Friday, January 30, 2015. As of February 2,
2015, the Exchange, via BATS Trading, will no longer be able to route
orders to LavaFlow and, therefore, proposes to remove fee codes M and U
as well as a reference to the ROLF routing strategy in Footnote 7. The
Exchange believes that the proposed amendments are intended to make the
Fee Schedule clearer and less confusing for investors and eliminate
potential investor confusion, thereby removing impediments to and
perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest.
Non-Substantive and Organizational Changes to Fee Code and Associated
Fees
The Exchange believes that the non-substantive clarifying changes
to its Fee Schedule are reasonable because they are designed to provide
greater transparency to Members with regard to how the Exchange
assesses fees and calculates rebates. The Exchange notes that none of
the proposed non-substantive clarifying changes are designed to amend
any fee, nor alter the manner in which it assesses fees or calculates
rebates. These non-substantive and organizational changes to the Fee
Schedule as intended to make the Fee Schedule clearer and less
confusing for investors and eliminate potential investor confusion,
thereby removing impediments to and perfecting the mechanism of a free
and open market and a national market system, and, in general,
protecting investors and the public interest.

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
does not believe that the proposed change represents a significant
departure from previous pricing offered by the Exchange or pricing
offered by the Exchange's competitors. Additionally, Members may opt to
disfavor the Exchange's pricing if they believe that alternatives offer
them better value. Accordingly, the Exchange does not believe that the
proposed change will impair the ability of Members or competing venues
to maintain their competitive standing in the financial markets.
ADV and TCV Definitions
The proposal to remove a provision to exclude shares from January
12, 2015 up to and including January 16, 2015 from the ADV and TCV
calculations would not affect intermarket nor intramarket competition
because it is no longer necessary as the exclusion period has passed.
Fee Code D
The Exchange believes that its proposal to update fee code D to
also include order routed using the RDOT routing strategy would not
affect intermarket nor intramarket competition because this change is
not designed to amend any fee or rebate or alter the manner in which
the Exchange assesses fees for orders yielding fee code D amend the
orders to which fee code D applies. It is simply proposed to update the
description of fee code D to make clear that it also includes orders
routed using the RDOT routing strategy, in addition to orders routed to
the NYSE.
Fee Codes M and U, Footnote 7
The Exchange believes that its proposal to delete fee codes M and U
and amend Footnote 7 would not affect intermarket nor intramarket
competition because this change is not designed to amend any fee or
rebate or alter the manner in which the Exchange assesses fees or
calculates rebates. It is simply proposed in response to LavaFlow's
announcement that it will cease market operations and its last day of
trading will be Friday, January 30, 2015.
Non-Substantive and Organizational Changes to Fee Code and Associated
Fees
The Exchange believes that non-substantive and organizational
changes to the Fee Schedule would not affect intermarket nor
intramarket competition because none of these changes are designed to
amend any fee or alter the manner in which the Exchange assesses fees
or calculates rebates. These changes are intended to provide greater
clarity to Members with regard to how the Exchange access fees and
calculates rebates.

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)(A) of the Act \15\ and paragraph (f) of Rule 19b-4
thereunder.\16\ At any time within 60 days of the filing of the
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.
---------------------------------------------------------------------------

\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2015-07 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-EDGA-2015-07. 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

[[Page 8383]]

proposed rule change between the Commission and any person, other than
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-EDGA-2015-07, and should be
submitted on or before March 10, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-03078 Filed 2-13-15; 8:45 am]
BILLING CODE 8011-01-P

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