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Published Document: 2015-29229 (80 FR 71862)
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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 November 2, 2015, 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 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange filed a proposal to amend the fee schedule applicable to Members [5]
and non-members of the Exchange pursuant to EDGX Rules 15.1(a) and (c) (“Fee Schedule”).
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 Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to increase the fee for orders yielding fee code D, which results from an order routed to the New York Stock Exchange (“NYSE”) or routed using the RDOT routing strategy. In securities priced at or above $1.00, the Exchange currently assesses a fee of $0.0027 per share for Members' orders that yield fee code D. The Exchange proposes to amend its Fee Schedule to increase this fee to $0.00275 per share. The proposed change would enable the Exchange to pass through the rate that BATS Trading, Inc. (“BATS Trading”), the Exchange's affiliated routing broker-dealer, is charged for routing orders to NYSE when it does not qualify for a volume tiered reduced fee. The proposed change is in response to NYSE's November 2015 fee change where NYSE increased the fee to remove liquidity via routable order types it charges its customers, from a fee of $0.0027 per share to a fee of $0.00275 per share.[6]
When BATS Trading routes to NYSE, it will now be charged a standard rate of $0.00275 per share. BATS Trading will pass through this rate to the Exchange and the Exchange, in turn, will pass through of a rate of $0.00275 per share to its Members. The proposed increase to the fee under fee code D would enable the Exchange to equitably allocate its costs among all Members utilizing fee code D. The Exchange proposes to implement this amendment to its Fee Schedule immediately.
In addition to the change proposed above, the Exchange proposes to change certain references on the Fee Schedule in connection with the launch of the options exchange operated by the Exchange. First, the Exchange propose [sic] to modify references in the Unicast Access section under BATS Connect fees to refer to “BZX Options” instead of “BATS Options”. Second, the Exchange proposes to add reference to
( printed page 71863)
EDGX Options in the list of Exchange affiliates to which such fees do not apply.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,[7]
in general, and furthers the objectives of Section 6(b)(4),[8]
in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. The Exchange believes that its proposal to increase the fee for Members' orders that yield fee code D from $0.0027 per share to $0.00275 per share represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities because the Exchange does not levy additional fees or offer additional rebates for orders that it routes to NYSE through BATS Trading. As of November 1, 2015 [sic], NYSE amended its fee to remove liquidity via routable order types it charges its customers, from a fee of $0.0027 per share to a fee of $0.00275 per share.[9]
Therefore, the Exchange believes that its proposal to pass through a fee of $0.00275 per share for orders that yield fee code D is equitable and reasonable because it accounts for the pricing changes on NYSE. In addition, the proposal allows the Exchange to continue to charge its Members a pass-through rate for orders that are routed to NYSE. Furthermore, the Exchange notes that routing through BATS Trading is voluntary. Lastly, the Exchange also believes that the proposed amendment is non-discriminatory because it applies uniformly to all Members. The Exchange also believes that the changes to add EDGX Options to the list of affiliates under Unicast Access and the re-naming of BATS Options as BZX Options is consistent with the Act. Such changes reflect and are in connection with the launch of EDGX Options but do not result in any material change to the Exchange's Fee Schedule or impose any new or different fee.
(B) Self-Regulatory Organization's Statement on Burden on Competition
These proposed rule changes do 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 any of these changes represent 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 changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal to pass through a fee of $0.00275 per share for Members' orders that yield fee code D would increase intermarket competition because it offers customers an alternative means to route to NYSE. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members.
(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 [10]
and paragraph (f) of Rule 19b-4 thereunder.[11]
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:
Send an email torule-comments@sec.gov.
Please include File Number SR-EDGX-2015-55 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
November 10, 2015.
All submissions should refer to File Number SR-EDGX-2015-55. 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 (
http://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-2015-55 and should be submitted on or before December 8,
2015.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12
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 [sic]. 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).