
[Federal Register Volume 80, Number 248 (Monday, December 28, 2015)]
[Notices]
[Pages 80832-80834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32536]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76708; File No. SR-EDGX-2015-63]


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

December 21, 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 December 10, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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).
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
---------------------------------------------------------------------------

    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 modify the ``Options Pricing'' section of 
its fee schedule effective immediately, to modify pricing for orders 
routed away from the Exchange and executed at various away options 
exchanges. The Exchange currently charges the following rates for 
orders routed to certain other options exchanges: (i) Non-Customer \6\ 
orders in non-Penny Pilot Securities.\7\ routed to NYSE Arca, Inc. 
(``Arca''), which yield fee code AG, are charged $0.95 per contract; 
(ii) Intermarket Sweep Orders (``ISOs'') in non-Penny Pilot Securities 
that are directed to Nasdaq Options Market LLC (``NOM''), Arca, or ISE 
Gemini, LLC (``ISE Gemini'') are charged $0.95 per contract; (iii) ISOs 
directed to other options exchanges are charged $0.65 per contract; \8\ 
(iv) Customer orders routed to the International Securities Exchange, 
LLC (``ISE'') in non-Penny Pilot Securities which yield fee code ID and 
are charged $0.12 per contract; (v) Customer orders routed to the Miami 
International Securities Exchange LLC (``MIAX'') which yield fee code 
MC are charged $0.12 per contract; (vi) Non-Customer orders routed to 
MIAX which yield fee code MF are charged $0.65 per contract; (vii) 
Customer orders routed to the BOX Options Exchange LLC (``BOX'') which 
yield fee code OC are charged no fee; (viii) Non-Customer orders routed 
to BOX which yield fee code OF are charged $0.99 per contract; (ix) 
Non-Customer orders routed to NOM in Penny Pilot Securities which yield 
fee code QF are charged $0.65 per contract; (x) Non-Customer orders 
routed to NOM in non-Penny Pilot Securities which yield fee code QG are 
charged $0.95 per contract; and (xi) Customer orders routed to NYSE MKT 
LLC (``NYSE MKT'' f/k/a AMEX) which yield fee code XC are charged $0.12 
per contract.
---------------------------------------------------------------------------

    \6\ ``Non-Customer'' applies to any transaction that is not a 
Customer Order. ``Customer'' applies to any transaction identified 
by a Member for clearing in the Customer range at the OCC, excluding 
any transaction for a Broker Dealer or a ``Professional'' as defined 
in Exchange Rule 16.1.
    \7\ ``Penny Pilot Securities'' are those issues quoted pursuant 
to Exchange Rule 21.5, Interpretation and Policy .01.
    \8\ ISOs directed to Nasdaq OMX BX LLC (``Nasdaq BX'') in non-
Penny Pilot Securities which yield fee code D2 and ISOs directed to 
the C2 Options Exchange, Inc. (``C2'') and Nasdaq OMX PHLX LLC 
(``Nasdaq PHLX'') which yield fee code D3 are charged $0.95 per 
contract.
---------------------------------------------------------------------------

    In an effort to continue to offer routing services to its Members 
at prices that approximate the cost to the Exchange, the Exchange is 
proposing to amend those rates as follows: (i) the fee for Customer 
orders routed to ISE in non-Penny Pilot Securities and any Customer 
orders routed to MIAX, BOX or NYSE MKT (fee codes ID, MC, OC and XC, 
respectively) would be increased to $0.15 per contract; (ii) the fee 
for Non-Customer Orders in non-Penny Pilot Securities routed to Arca 
would be increased to $1.15 per contract (fee code AG); (iii) the fee 
for ISOs directed to NOM, Arca, or ISE Gemini would be increased to 
$1.25 per contract for Non-Penny Pilot Securities (fee code D1); (iv) 
the fee for ISOs directed to other options exchanges would be increased 
to $0.75 per contract (fee code D4); \9\ (v) the fee for Non-Customer 
orders routed to MIAX would be increased to $0.85 per contract (fee 
code MF); (vi) the fee for Non-Customer orders routed to BOX would be 
increased to $1.20 (fee code OF); (vii) the fee for Non-Customer orders 
routed to NOM in Penny Pilot Securities would be increased to $0.70 
(fee code QF); and (viii) the fee for Non-Customer orders routed to NOM 
in non-Penny Pilot Securities would be increased to $1.25 (fee code 
QG).
---------------------------------------------------------------------------

    \9\ The Exchange does not propose to amend the fees charged for 
ISOs directed to Nasdaq BX in non-Penny Pilot Securities which yield 
fee code D2 and ISOs directed to the C2 and Nasdaq PHLX which yield 
fee code D3.
---------------------------------------------------------------------------

    As noted previously and as set forth above, the Exchange's current 
approach to routing fees is to set forth in a simple manner certain 
sub-categories of fees that approximate the cost of routing to other 
options exchanges based on the cost of transaction fees assessed by 
each venue as well as costs to the Exchange for routing (i.e., clearing 
fees, connectivity and other infrastructure costs, membership fees, 
etc.) (collectively, ``Routing Costs''). The Exchange then monitors the 
fees charged as compared to the costs of its routing services and 
adjusts its routing

[[Page 80833]]

fees and/or sub-categories to ensure that the Exchange's fees do indeed 
result in a rough approximation of overall Routing Costs, and are not 
significantly higher or lower in any area. In performing this analysis, 
the Exchange has concluded that certain orders that it was routing to 
other options exchanges were costing more than it was charging, and in 
one case, were costing significantly less than it was charging. As a 
result, and in order to avoid subsidizing routing to away options 
exchanges and to continue providing quality routing services, the 
Exchange proposes relatively modest increases and adjustments to the 
charges assessed for the orders described above.
Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule immediately.\10\
---------------------------------------------------------------------------

    \10\ The Exchange initially filed the proposed fee change on 
December 1, 2015 (SR-EDGX-2015-57). On December 10, 2015, the 
Exchange withdrew that filing and submitted filing SR-BATS-2015-63 
[sic].
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\11\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\12\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and other persons using any facility or system which the 
Exchange operates or controls. The Exchange notes that it operates in a 
highly competitive market in which market participants can readily 
direct order flow to competing venues or providers of routing services 
if they deem fee levels to be excessive.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    As explained above, the Exchange generally attempts to approximate 
the cost of routing to other options exchanges, including other 
applicable costs to the Exchange for routing. The Exchange believes 
that a pricing model based on approximate Routing Costs is a 
reasonable, fair and equitable approach to pricing. Specifically, the 
Exchange believes that its proposal to modify fees is fair, equitable 
and reasonable because the fees are generally an approximation of the 
cost to the Exchange for routing orders to such exchanges. Absent the 
proposed changes, the Exchange has concluded that certain orders that 
it was routing to other options exchanges would cost more than its 
current fees. Accordingly, the Exchange believes that the proposed 
increases are fair, equitable and reasonable because they will help the 
Exchange to avoid subsidizing routing to away options exchanges and to 
continue providing quality routing services. The Exchange believes that 
its fee structure for orders routed to various venues is a fair and 
equitable approach to pricing, as it provides certainty with respect to 
execution fees at away options exchanges. Under its straightforward fee 
structure, taking all costs to the Exchange into account, the Exchange 
may operate at a slight gain or slight loss for orders routed to and 
executed at away options exchanges. As a general matter, the Exchange 
believes that the proposed fees will allow it to recoup and cover its 
costs of providing routing services to such exchanges. The Exchange 
notes that routing through the Exchange is voluntary. The Exchange also 
believes that the proposed fee structure for orders routed to and 
executed at these away options exchanges is fair and equitable and not 
unreasonably discriminatory in that it applies equally to all Members.
    The Exchange reiterates 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 to be excessive or providers 
of routing services if they deem fee levels to be excessive. Finally, 
the Exchange notes that it constantly evaluates its routing fees, 
including profit and loss attributable to routing, as applicable, in 
connection with the operation of a flat fee routing service, and would 
consider future adjustments to the proposed pricing structure to the 
extent it was recouping a significant profit or loss from routing to 
away options exchanges.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. As it relates to the proposed 
changes to routing fees, the proposed changes will assist the Exchange 
in recouping costs for routing orders to other options exchanges on 
behalf of its participants in a manner that is a better approximation 
of actual costs than is currently in place and that reflects pricing 
changes by various options exchanges as well as increases to other 
Routing Costs incurred by the Exchange. The Exchange also notes that 
Members may choose to mark their orders as ineligible for routing to 
avoid incurring routing fees.\13\
---------------------------------------------------------------------------

    \13\ See Exchange Rule 21.1(d)(8) (describing ``Post Only 
Orders'') and Exchange Rule 21.9(a)(1) (describing the routing 
process, which requires orders to be designated as available for 
routing).
---------------------------------------------------------------------------

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from 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 \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-EDGX-2015-63 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-2015-63. 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

[[Page 80834]]

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 such 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-2015-63 and should be 
submitted on or before January 19, 2016.
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Brent J. Fields,
Secretary.
[FR Doc. 2015-32536 Filed 12-24-15; 8:45 am]
 BILLING CODE 8011-01-P


