Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change, and Amendment No. 1 Thereto, To Establish a New Market Data Product Called the BATS One Feed, 69180-69185 [2014-27446]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 224 (Thursday, November 20, 2014)]
[Notices]
[Pages 69180-69185]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27446]



[[Page 69180]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73597; File No. SR-EDGX-2014-25]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change, and Amendment No. 1 Thereto, To 
Establish a New Market Data Product Called the BATS One Feed

November 14, 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 October 30, 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 and II below, which Items 
have been prepared by the Exchange. On November 13, 2014, the Exchange 
filed Amendment No. 1 to the proposed rule change. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 establish a new market data 
product called the BATS One Feed.
    The text of the proposed rule change is available at the Exchange's 
Web site at https://www.directedge.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 establish a new market data product called 
the BATS One Feed. As described more fully below, the BATS One Feed is 
a data feed that will disseminate, on a real-time basis, the aggregate 
best bid and offer (``BBO'') of all displayed orders for securities 
traded on EDGX and its affiliated exchanges \3\ (collectively, the 
``BATS Exchanges'') and for which the BATS Exchanges report quotes 
under the Consolidated Tape Association (``CTA'') Plan or the Nasdaq/
UTP Plan.\4\ The BATS One Feed will also contain the individual last 
sale information for EDGX and each of its affiliated exchanges. In 
addition, the BATS One Feed will contain optional functionality which 
will enable recipients to elect to receive aggregated two-sided 
quotations from the BATS Exchanges for up to five (5) price levels.
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    \3\ EDGX's affiliated exchanges are EDGA Exchange, Inc. 
(``EDGA''), BATS Exchange, Inc. (``BATS''), and BATS Y-Exchange, 
Inc. (``BYX''). On January 31, 2014, Direct Edge Holdings LLC (``DE 
Holdings''), the former parent company of the Exchange and EDGA, 
completed its business combination with BATS Global Markets, Inc., 
the parent company of BATS and BYX. See Securities Exchange Act 
Release No. 71449 (January 30, 2014), 79 FR 6961 (February 5, 2014) 
(SR-EDGX-2013-43). Upon completion of the business combination, DE 
Holdings and BATS Global Markets, Inc. each became intermediate 
holding companies, held under a single new holding company. The new 
holding company, formerly named ``BATS Global Markets Holdings, 
Inc.,'' changed its name to ``BATS Global Markets, Inc.''
    \4\ The Exchange understands that each of the BATS Exchanges 
will separately file substantially similar proposed rule changes 
with the Commission to implement the BATS One Feed and its related 
fees.
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    The BATS One Feed offers market data vendors and purchasers a 
suitable alternative to the use of consolidated data where consolidated 
data are not required to be purchased or displayed. The Exchange 
proposes to offer the BATS One Feed voluntarily in response to demand 
from vendors, and subscribers that are interested in receiving the 
aggregate BBO and last sale information from the BATS Exchanges as part 
of a single data feed. Specifically, BATS One can be used by industry 
professionals and retail investors looking for a cost effective, easy-
to-administer, high quality market data product with the 
characteristics of the BATS One Feed.
    The Exchange believes that the BATS One Feed would provide high-
quality, comprehensive last sale and BBO data for the BATS Exchanges in 
a unified view and respond to subscriber demand for such a product. The 
Exchange notes that an anticipated end user might use the BATS One Feed 
for purposes of identifying an indicative price of Tape A, B, and C 
securities through leveraging the depth and breadth of BATS Exchanges 
without having to purchase consolidated data and thus it would not be a 
latency-sensitive product. The Exchange does not anticipate that an end 
user would, or could, use the BATS One Feed data for purposes of making 
order-routing or trading decisions. Rather, the Exchange notes that 
under Rule 603 of Regulation NMS, the BATS One Feed could not be 
substituted for consolidated data in all instances in which 
consolidated data is used and certain subscribers would still be 
required to purchase consolidated data for trading and order-routing 
purposes.\5\
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    \5\ 17 CFR 242.603(c).
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    Finally, the proposed BATS One Feed would provide investors with 
new options for receiving market data and compete with similar market 
data products proposed by the New York Stock Exchange, Inc. (``NYSE'') 
and those currently offered by the Nasdaq Stock Market LLC 
(``Nasdaq'').\6\ The provision of new options for investors to receive 
market data was a primary goal of the market data amendments adopted by 
Regulation NMS.\7\
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    \6\ See Nasdaq Basic, https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed 
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market 
center, as well as trades reported to the FINRA/Nasdaq Trade 
Reporting Facility (``TRF''));Nasdaq NLS Plus, https://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8, 
2014) (data feed providing last sale data as well as consolidated 
volume from the following Nasdaq OMX markets for U.S. exchange-
listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and 
Nasdaq OMX PSX); Securities Exchange Act Release No. 72750 (August 
4, 2014), 79 FR 46494 (August 8, 2014) (SR-NYSE-2014-40) (Notice of 
Filing of Proposed Rule Change Establishing the NYSE Best Quote & 
Trades (``BQT'') Data Feed); https://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades (last visited May 27, 2014) (data feed 
providing unified view of BBO and last sale information for the 
NYSE, NYSE Arca, and NYSE MKT).
    \7\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, at 37503 (June 29, 2005) (Regulation NMS 
Adopting Release).
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Description of the BATS One Feed
    The BATS One Feed will contain the aggregate BBO of the BATS 
Exchanges for all securities that are traded on the BATS Exchanges and 
for which the BATS Exchanges report quotes under the CTA Plan or the 
Nasdaq/UTP Plan. The aggregate BBO would include the total size of all 
orders at the BBO

[[Page 69181]]

available on all BATS Exchanges.\8\ The BATS One Feed would also 
disseminate last sale information for each of the individual BATS 
Exchanges (collectively with the aggregate BBO, the ``BATS One Summary 
Feed''). The last sale information will include the price, size, time 
of execution, and individual BATS Exchange on which the trade was 
executed. The last sale message will also include the cumulative number 
of shares executed on all BATS Exchanges for that trading day. The 
Exchange will disseminate the aggregate BBO of the BATS Exchanges and 
last sale information through the BATS One Feed no earlier than each 
individual BATS Exchange provides its BBO and last sale information to 
the processors under the CTA Plan or the Nasdaq/UTP Plan.
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    \8\ The Exchange notes that quotations of odd lot size, which is 
generally less than 100 shares, are included in the total size of 
all orders at a particular price level in the BATS One Feed but are 
currently not reported by the BATS Exchanges to the consolidated 
tape.
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    The BATS One Feed would also consist of Symbol Summary, Market 
Status, Retail Liquidity Identifier on behalf of BYX, Trading Status, 
and Trade Break messages. The Symbol Summary message will include the 
total executed volume across all BATS Exchanges. The Market Status 
message is disseminated to reflect a change in the status of one of the 
BATS Exchanges. For example, the Market Status message will indicate 
whether one of the BATS Exchanges is experiencing a systems issue or 
disruption and quotation or trade information from that market is not 
currently being disseminated via the BATS One Feed as part of the 
aggregated BBO. The Market Status message will also indicate where BATS 
Exchange is no longer experiencing a systems issue or disruption to 
properly reflect the status of the aggregated BBO.
    The Retail Liquidity Identifier indicator message will be 
disseminated via the BATS One Feed on behalf of the BYX only pursuant 
to BYX's Retail Price Improvement (``RPI'') Program.\9\ The Retail 
Liquidity Identifier indicates when RPI interest priced at least $0.001 
better than BYX's Protected Bid or Protected Offer for a particular 
security is available in the System. The Exchange proposes to 
disseminate the Retail Liquidity Indicator via the BATS One Feed in the 
same manner as it is currently disseminated through consolidated data 
streams (i.e., pursuant to the Consolidated Tape Association Plan/
Consolidated Quotation Plan, or CTA/CQ, for Tape A and Tape B 
securities, and the Nasdaq UTP Plan for Tape C securities) as well as 
through proprietary BYX data feeds. The Retail Liquidity Identifier 
will reflect the symbol and the side (buy or sell) of the RPI interest, 
but does not include the price or size of the RPI interest. In 
particular, like CQ and UTP quoting outputs, the BATS One Feed will 
include a field for codes related to the Retail Price Improvement 
Identifier. The codes indicate RPI interest that is priced better than 
BYX's Protected Bid or Protected Offer by at least the minimum level of 
price improvement as required by the Program.
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    \9\ For a description of BYX's RPI Program, see BYX Rule 11.24. 
See also Securities Exchange Act Release No. 68303 (November 27, 
2012), 77 FR 71652 (December 3, 2012) (SR-BYX-2012-019) (Order 
Granting Approval of Proposed Rule Change, as Modified by Amendment 
No. 2, to Adopt a Retail Price Improvement Program); Securities 
Exchange Act Release No. 67734 (August 27, 2012), 77 FR 53242 
(August 31, 2012) (SR-BYX-2019-019) (Notice of Filing of Proposed 
Rule Change to Adopt a Retail Price Improvement Program).
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    The Trade Break message will indicate when an execution on a BATS 
Exchange is broken in accordance with the individual BATS Exchange's 
rules.\10\ The Trading Status message will indicate the current trading 
status of a security on each individual BATS Exchange. For example, a 
Trading Status message will be sent when a short sale price restriction 
is in effect pursuant to Rule 201 of Regulation SHO (``Short Sale 
Circuit Breaker''),\11\ or the security is subject to a trading halt, 
suspension or pause declared by the listing market. A Trading Status 
message will be sent whenever a security's trading status changes.
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    \10\ See, e.g., Exchange and EDGA Rule 11.13, Clearly Erroneous 
Executions, and BATS and BYX Rule 11.17, Clearly Erroneous 
Executions.
    \11\ 17 CFR 242.200(g); 17 CFR 242.201
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    Optional Aggregate Depth of Book. The BATS One Feed will also 
contain optional functionality which will enable recipients to receive 
two-sided quotations from the BATS Exchanges for five (5) price levels 
for all securities that are traded on the BATS Exchanges in addition to 
the BATS One Summary Feed (``BATS One Premium Feed''). For each price 
level on one of the BATS Exchanges, the BATS One Premium Feed option of 
the BATS One Feed will include a two-sided quote and the number of 
shares available to buy and sell at that particular price level.\12\
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    \12\ Recipients who do not elect to receive the BATS One Premium 
Feed will receive the aggregate BBO of the BATS Exchanges under the 
BATS Summary Feed, which, unlike the BATS Premium Feed, would not 
delineate the size available at the BBO on each individual BATS 
Exchange.
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Implementation Date
    The Exchange anticipates making available the BATS One feed as soon 
as practicable after approval of the proposed rule change by the 
Commission and the effectiveness of a rule filing to establish the fees 
for BATS One.\13\
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    \13\ The Exchange intends to file a separate proposal 
establishing the fees for BATS One.
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2. Statutory Basis
    The Exchange believes that the proposed BATS One Feed is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\15\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and to protect investors and the public 
interest, and that it is not designed to permit unfair discrimination 
among customers, brokers, or dealers. This proposal is in keeping with 
those principles in that it promotes increased transparency through the 
dissemination of the BATS One Feed. The Exchange also believes this 
proposal is consistent with Section 6(b)(5) of the Act because it 
protects investors and the public interest and promotes just and 
equitable principles of trade by providing investors with new options 
for receiving market data as requested by market data vendors and 
purchasers that expressed an interest in exchange-only data for 
instances where consolidated data is no longer required to be purchased 
and displayed. The proposed rule change would benefit investors by 
facilitating their prompt access to real-time last sale information and 
best-bid-and-offer information contained in the BATS One Feed.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \16\ in that it supports (i) 
fair competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\17\ which provides that any national securities 
exchange that distributes information with respect to quotations for or 
transactions in an NMS stock do so on terms that are not unreasonably 
discriminatory.
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    \16\ 15 U.S.C. 78k-1.
    \17\ See 17 CFR 242.603.

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[[Page 69182]]

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to consumers of such data. It was 
believed that this authority would expand the amount of data available 
to users and consumers of such data and also spur innovation and 
competition for the provision of market data. The Exchange believes 
that the data products proposed herein are precisely the sort of market 
data products that the Commission envisioned when it adopted Regulation 
NMS. The Commission concluded that Regulation NMS--by lessening 
regulation of the market in proprietary data--would itself further the 
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Act's goals of facilitating efficiency and competition:

    [E]fficiency is promoted when broker-dealers who do not need the 
data beyond the prices, sizes, market center identifications of the 
NBBO and consolidated last sale information are not required to 
receive (and pay for) such data. The Commission also believes that 
efficiency is promoted when broker-dealers may choose to receive 
(and pay for) additional market data based on their own internal 
analysis of the need for such data.\18\

    \18\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04).

By removing ``unnecessary regulatory restrictions'' on the ability of 
exchanges to sell their own data, Regulation NMS advanced the goals of 
the Act and the principles reflected in its legislative history.
    If the free market should determine whether proprietary data is 
sold to broker-dealers at all, it follows that the price at which such 
data is sold should be set by the market as well. The BATS One Feed is 
precisely the sort of market data product that the Commission 
envisioned when it adopted Regulation NMS.
    The BATS One Feed would be distributed and purchased on a voluntary 
basis, in that neither the BATS Exchanges nor market data distributors 
are required by any rule or regulation to make this data available. 
Accordingly, distributors and users can discontinue use at any time and 
for any reason, including due to an assessment of the reasonableness of 
fees charged.
    The Exchange believes that the proposed BATS One Feed will offer an 
alternative to the use of consolidated data products and proprietary 
data products offered by the NYSE and Nasdaq. Nasdaq Basic is a product 
that includes two feeds, QBBO, which provides BBO information for all 
U.S. exchange-listed securities on Nasdaq and NLS Plus, which provides 
last sale data as well as consolidated volume from the following Nasdaq 
OMX markets for U.S. exchange-listed securities: Nasdaq, FINRA/Nasdaq 
TRF,\19\ Nasdaq OMX BX, and Nasdaq OMX PSX.\20\ According to Nasdaq, 
seven vendors and more than 1,000 firms subscribe to Nasdaq Basic, 
including 9 out of 10 of the largest banks.\21\
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    \19\ See Nasdaq Basic, https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed 
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market 
center, as well as trades reported to the FINRA/Nasdaq TRF).
    \20\ See Nasdaq NLS Plus, https://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8, 2014) (data feed 
providing last sale data as well as consolidated volume from the 
following Nasdaq OMX markets for U.S. exchange-listed securities: 
Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and Nasdaq OMX PSX).
    \21\ See Nasdaq Basic, Doing More with Less, available at https://www.brainshark.com/nasdaqomx/vu?pi=zG8z33O6ozAgBpz0&tx=preview&preview=1 and https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic#vendors.
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    Likewise, the NYSE has proposed NYSE BQT, which would include the 
BBO and last sale information for the NYSE, NYSE Arca, and NYSE 
MKT.\22\ The Exchange believes the BATS One Feed will offer a 
competitive alternative to the existing Nasdaq Basic product and the 
proposed NYSE product.
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    \22\ See Securities Exchange Act Release No. 72750 (August 4, 
2014), 79 FR 46494 (August 8, 2014) (SR-NYSE-2014-40) (Notice of 
Filing of Proposed Rule Change Establishing the NYSE BQT Data Feed); 
https://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades 
(last visited May 27, 2014) (data feed providing unified view of BBO 
and last sale information for the NYSE, NYSE Arca, and NYSE MKT).
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    In addition, the proposal would not permit unfair discrimination 
because the product will be available to all of the Exchange's 
customers and market data vendors on an equivalent basis. In addition, 
any customer that wishes to purchase one or more of the individual data 
feeds offered by the BATS Exchanges would be able to do so.
    In addition, the Exchange does not believe that the proposal would 
permit unfair discrimination among customers, brokers, or dealers and 
thus is consistent with the Act because the Exchange will be offering 
the product on terms that a competing vendor could offer a competing 
product. Specifically, the proposed data feed does not represent 
Exchange core data, but rather a new product that represents an 
aggregation and consolidation of existing, previously filed individual 
market data products of the BATS Exchanges. As such, a competing vendor 
could similarly obtain the underlying data feeds and perform a similar 
aggregation and consolidation function to create the same data product 
with the same latency and cost as the Exchange.
    The Exchange has taken into consideration its affiliated 
relationship with EDGA, BYX, and BZX in its design of the BATS One Feed 
to assure that vendors would be able to offer a similar product on the 
same terms as the Exchange, both from the perspective of latency and 
cost. As discussed above, the Exchange proposes to offer the BATS One 
Feed voluntarily in response to demand from vendors, and subscribers 
that are interested in receiving the aggregate BBO and last sale 
information from the BATS Exchanges as part of a single data feed. 
Specifically, BATS One can be used by industry professionals and retail 
investors looking for a cost effective, easy-to-administer, high 
quality market data product with the characteristics of the BATS One 
Feed. The BATS One Feed would help protect a free and open market by 
providing vendors and subscribers additional choices in receiving this 
type of market data, thus promoting competition and innovation.
    With respect to latency, the path for distribution by the Exchange 
of BATS One Feed would not be faster than a vendor that independently 
created a BATS One-like product could distribute its own product. As 
such, the proposed BATS One data feed is a data product that a 
competing vendor could create and sell without being in a disadvantaged 
position relative to the Exchange. In recognition that the Exchange is 
the source of its own market data and is affiliated with EDGA, BATS and 
BYX, the Exchange represents that the source of the market data it 
would use to create the proposed BATS One Feed is available to other 
vendors. Specifically, the Exchange would use the following data feeds 
to create the proposed BATS One Feed, each of which is available to 
other vendors: The Exchange's EdgeBook Depth feed, the EdgeBook Depth 
feed for EDGA, the BYX PITCH Feed, and the BATS PITCH Feed. The BATS 
Exchanges will continue to make available these individual underlying 
feeds, and thus, the source of the market data it would use to create 
the proposed BATS One feed is the same as the source available to other 
vendors.
    In order to create the BATS One Feed, the Exchange will receive the 
individual data feeds from each BATS Exchange and, in turn, aggregate 
and summarize that data to create the BATS One Feed.

[[Page 69183]]

This is the same process a competing vendor would undergo should it 
create a market data product similar to the BATS One Feed to distribute 
to its end users. In addition, the servers of most competing vendors 
are likely located in the same facilities as the Exchange, and, 
therefore, should receive the individual data feed from each BATS 
Exchange on or about the same time the Exchange would for it to create 
the BATS One Feed. Therefore, a competing vendor that is located in the 
same facilities as the Exchange could obtain the underlying data feeds 
from the BATS Exchanges on the same latency basis as the system that 
would be performing the aggregation and consolidation of the proposed 
BATS One Feed and provide the same type of product to its customers 
with the same latency they could achieve by purchasing the BATS One 
Feed from the Exchange. As such, the Exchange would not have any unfair 
advantage over competing vendors with respect to obtaining data from 
the individual BATS Exchanges, in fact, the technology supporting the 
BATS One Feed would similarly need to obtain the Exchange's data feed 
as well and even this connection would be on a level playing field with 
a competing vendor located at the same facility as the Exchange. The 
Exchange has designed the BATS One data feed so that it would not have 
a competitive advantage over a competing vendor with respect to the 
speed of access to those underlying data feeds. Likewise, the BATS One 
data feed would not have a speed advantage vis-[agrave]-vis competing 
vendors located in the same data center as the Exchange with respect to 
access to end user customers, whether those end users are also located 
in the same data center or not.
    With regard to cost, the Exchange will file a separate rule filing 
with the Commission to establish fees for BATS One which would be 
designed to ensure that vendors could compete with the Exchange by 
creating a similar product as the BATS One Feed. The pricing the 
Exchange would charge for the BATS One Feed would not be lower than the 
cost to a vendor of receiving the underlying data feeds and of 
maintaining servers in the same facility as the Exchange to receive the 
data feeds with no greater latency than the Exchange. The pricing the 
Exchange would charge clients for the BATS One Feed compared to the 
cost of the individual data feeds from the BATS Exchanges would enable 
a vendor to receive the underlying data feeds and offer a similar 
product on a competitive basis and with no greater latency than the 
Exchange. The Distribution Fees that the Exchange intends to propose 
for the BATS One Feed would be equal to the combined fee of subscribing 
to each individual data feed,\23\ therefore, enabling a vendor to 
create a competing product based on the individual data feeds and 
charge its clients a fee that it believes reflects the value of the 
aggregation and consolidation function that is competitive with BATS 
One Feed pricing. The Exchanges believes that the incremental cost to a 
particular vendor for aggregation can be supported by the vendor's 
revenue opportunity and may be inconsequential if such vendor already 
has systems in place to perform these functions as part of creating its 
proprietary market data products and is able to allocate these costs 
over numerous products and customer relationships. For these reasons, 
the Exchange believes that vendors could readily offer a product 
similar to the BATS One Feed on a competitive basis at a similar cost.
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    \23\ The combined external distribution fee for the individual 
data feeds of the BATS Exchanges is $12,500.00 per month. The 
monthly external distribution fee is $2,500 per month for the 
EdgeBook Depth feed for the Exchange, $2,500 per month for the 
EdgeBook Depth feed for EDGA, $2,500 for the BYX PITCH Feed, and 
$5,000 for the BATS PITCH Feed.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. 
Because other exchanges already offer similar products,\24\ the 
Exchange's proposed BATS One Feed will enhance competition. 
Specifically, the BATS One Feed was developed to compete with similar 
market data products offered by Nasdaq and proposed by the NYSE.\25\ 
The BATS One Feed will foster competition by providing an alternative 
market data product to those offered by Nasdaq and the NYSE. This 
proposed new data feed provides investors with new options for 
receiving market data, which was a primary goal of the market data 
amendments adopted by Regulation NMS.\26\
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    \24\ See supra note 6.
    \25\ Id.
    \26\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, at 37503 (June 29, 2005) (Regulation NMS 
Adopting Release).
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    The proposed BATS One Feed would enhance competition by offering a 
market data product that is designed to compete directly with similar 
products offered by the NYSE and Nasdaq. Nasdaq Basic is a product that 
includes two feeds, QBBO, which provides BBO information for all U.S. 
exchange-listed securities on Nasdaq and NLS Plus, which provides last 
sale data as well as consolidated volume from the following Nasdaq OMX 
markets for U.S. exchange-listed securities: Nasdaq, FINRA/Nasdaq 
TRF,\27\ Nasdaq OMX BX, and Nasdaq OMX PSX.\28\ Likewise, NYSE BQT 
includes BBO and last sale information for the NYSE, NYSE Arca, and 
NYSE MKT.\29\ As a result, Nasdaq Basic and NYSE BQT comprise a 
significant view of the market on any given day and both include data 
from multiple trading venues. As the BATS Exchanges are consistently 
one of the top exchange operators by market share for U.S. equities 
trading, excluding opening and closing auction volume, the data 
included within the BATS One Feed will provide investors with an 
alternative to Nasdaq Basic and NYSE BQT and a new option for obtaining 
a broad market view, consistent with the primary goal of the market 
data amendments adopted by Regulation NMS.\30\
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    \27\ See Nasdaq Basic, https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed 
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market 
center, as well as trades reported to the FINRA/Nasdaq TRF).
    \28\ See Nasdaq NLS Plus, https://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8, 2014) (data feed 
providing last sale data as well as consolidated volume from the 
following Nasdaq OMX markets for U.S. exchange-listed securities: 
Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and Nasdaq OMX PSX).
    \29\ See Securities Exchange Act Release No. 72750 (August 4, 
2014), 79 FR 46494 (August 8, 2014) (SR-NYSE-2014-40) (Notice of 
Filing of Proposed Rule Change Establishing the NYSE BQT Data Feed); 
https://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades 
(last visited May 27, 2014) (data feed providing unified view of BBO 
and last sale information for the NYSE, NYSE Arca, and NYSE MKT).
    \30\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, at 37503 (June 29, 2005) (Regulation NMS 
Adopting Release).
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    The Exchange believes the BATS One Feed will further enhance 
competition by providing External Distributors with a data feed that 
allows them to more quickly and efficiently integrate into their 
existing products. Today, Distributors subscribe to various market data 
products offered by single exchanges and resell that data, either 
separately or in the aggregate, to their subscribers as part of the 
their own market data offerings. Distributors may incur administrative 
costs when consolidating and augmenting the data to meet their 
subscriber's need. Consequently, many External Distributors will simply 
choose to not take the data because of the effort and cost required to 
aggregate data from separate feeds into their existing

[[Page 69184]]

products. Those same Distributors have expressed interest in the BATS 
One Feed so that they may easily incorporate aggregated or summarized 
BATS Exchange data into their own products without themselves incurring 
the costs of the repackaging and aggregating the data it would receive 
by subscribing to each market data product offered by the individual 
BATS Exchanges. The Exchange, therefore, believes that by providing 
market data that encompasses combined data from affiliated exchanges, 
the Exchange enables certain External Distributors with the ability to 
compete in the provision of similar content with other External 
Distributors, where they may not have done so previously if they were 
required to subscribe to the depth-of-book feeds from each individual 
BATS Exchange.
    Although the Exchange considers the acceptance of the BATS One Feed 
by External Distributors as important to the success of the product, 
depending on their needs, External Distributors may choose not to 
subscribe to the BATS One Feed and may rather receive the BATS Exchange 
individual market data products and incorporate them into their 
specific market data products. For example, the BATS Premium Feed 
provides depth-of-book information for up to five price levels while 
each of the BATS Exchange's individual data feeds offer complete depth-
of-book and are not limited to five price levels.\31\ Those subscribers 
who wish to view the complete depth-of-book from each individual BATS 
Exchange may prefer to subscribe to one or all of individual BATS 
Exchange depth-of-book data feeds instead of the BATS One Feed. The 
BATS One Feed simply provides another option for Distributors to choose 
from when selecting a product that meets their market data needs. 
Subscribers who seek a broader market view but do not need complete 
depth-of- book may select the BATS One Feed while subscribers that seek 
the complete depth-of-book information may subscribe to the depth-of-
book feeds of each individual BATS Exchanges.
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    \31\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and 
(c), and BYX Rule 11.22 (a) and (c) for a description of the depth 
of book feeds offered by each of the BATS Exchanges.
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    Exchange Not the Exclusive Distributor of BATS One. Although the 
BATS Exchanges are the exclusive distributors of the individual data 
feeds from which certain data elements would be taken to create the 
BATS One Feed, the Exchange would not be the exclusive distributor of 
the aggregated and consolidated information that would compose the 
proposed BATS One Feed. Vendors would be able, if they chose, to create 
a data feed with the same information as the BATS One Feed and 
distribute it to their clients on a level-playing field with respect to 
latency and cost as compared to the Exchange's proposed BATS One Feed. 
The pricing the Exchange would charge for the BATS One Feed would not 
be lower than the cost to a vendor of receiving the underlying data 
feeds and of maintaining servers in the same facility as the Exchange 
to receive the data feeds with no greater latency than the Exchange. In 
addition, the pricing the Exchange would charge clients for the BATS 
One Feed compared to the cost of the individual data feeds from the 
BATS Exchanges would enable a vendor to receive the underlying data 
feeds and offer a similar product on a competitive basis and with no 
greater latency than the Exchange.
    Latency. The BATS One Feed is not intended to compete with similar 
products offered by External Distributors. Rather, it is intended to 
assist External Distributors in incorporating aggregated and summarized 
data from the BATS Exchanges into their own market data products that 
are provided to the end user. Therefore, Distributors will receive the 
data, who will, in turn, make available BATS One Feed to their end 
users, either separately or as incorporated into the various market 
data products they provide. As stated above, Distributors have 
expressed a desire for a product like the BATS One Feed so that they 
may easily incorporate aggregated or summarized BATS Exchange data into 
their own products without themselves incurring the administrative 
costs of repackaging and aggregating the data it would receive by 
subscribing to each market data product offered by the individual BATS 
Exchanges.
    Notwithstanding the above, the Exchange believes that External 
Distributors may create a product similar to BATS One Feed based on the 
market data products offered by the individual BATS Exchanges with no 
greater latency than the Exchange. As discussed above, in order to 
create the BATS One Feed, the Exchange will receive the individual data 
feeds from each BATS Exchange and, in turn, aggregate and summarize 
that data to create the BATS One Feed. This is the same process an 
External Distributor would undergo should it create a market data 
product similar to the BATS One Feed to distribute to its end users. In 
addition, the servers of most External Distributors are likely located 
in the same facilities as the Exchange, and, therefore, should receive 
the individual data feed from each BATS Exchange on or about the same 
time the Exchange would for it to create the BATS One Feed.
    The Exchange has designed the BATS One data feed so that it would 
not have a competitive advantage over a competing vendor with respect 
to the speed of access to those underlying data feeds. Likewise, the 
BATS One data feed would not have a speed advantage vis-[agrave]-vis 
competing vendors located in the same data center as the Exchange with 
respect to access to end user customers, whether those end users are 
also located in the same data center or not. Therefore, the Exchange 
believes that it will not incur any potential latency advantage that 
will result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.
    Cost. With regard to cost, the Exchange will file a separate rule 
filing with the Commission to establish fees for BATS One that would be 
designed to ensure that vendors could compete with the Exchange by 
creating a similar product as the BATS One Feed. The pricing the 
Exchange would charge clients for the BATS One Feed compared to the 
cost of the individual data feeds from the BATS Exchanges would enable 
a vendor to receive the underlying data feeds and offer a similar 
product on a competitive basis and with no greater latency than the 
Exchange. The Distribution Fees that the Exchange proposes for the BATS 
One Feed are equal to the combined fee of subscribing to each 
individual data feed,\32\ therefore, enabling a vendor to create a 
competing product based on the individual data feeds and charge its 
clients a fee that it believes reflects the value of the aggregation 
and consolidation function that is competitive with BATS One Feed 
pricing. The Exchanges believes that the incremental cost to a 
particular vendor for aggregation can be supported by the vendor's 
revenue opportunity and may be inconsequential if such vendor already 
has systems in place to perform these functions as part of creating its 
proprietary market data products and is able to allocate these costs 
over numerous products and customer relationships. For these reasons, 
the Exchange believes that vendors could readily offer a product 
similar to the BATS One Feed on a competitive basis at a similar cost.
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    \32\ See supra note 22.

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[[Page 69185]]

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

    A similar proposed rule change was initially filed with the 
Commission on July 14, 2014 and published for comment in the Federal 
Register on August 1, 2014.\33\ The Commission received no comment 
letters in response to that proposed rule change. However, three 
letters were submitted to the Commission commenting on a companion BZX 
and EDGA filings that proposed to offer the same feed.\34\ On September 
15, 2014, the Commission extended its review period until October 30, 
2014.\35\ On October 29, 2014, the Exchange withdrew the initial 
proposed rule change. The points raised by the Themis Letter and Shatto 
Letter are either not responsive to the issues raised in the proposal 
or aimed at existing elements of U.S. market structure that have been 
previously approved by the Commission.
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    \33\ See Securities Exchange Act Release No. 72691 (July 28, 
2014), 79 FR 44892 (August 1, 2014) (SR-EDGX-2014-19).
    \34\ But see Letter from Sal Arnuk and Joe Saluzzi, Themis 
Trading LLC, to Elizabeth M. Murphy, Secretary, Commission, dated 
August 21, 2014 (SR-BATS-2014-028) (``Themis Letter''); Letter from 
Ira D. Hammerman, General Counsel, SIFMA, to Kevin O'Neill, Deputy 
Secretary, Commission, dated August 22, 2014 (SR-BATS-2014-028) 
(``SIFMA Letter'') (letters commenting on companion BATS filing that 
proposes to offer the same feed); and Letter from Suzanne Hamlet 
Shatto to the Commission, dated August 19, 2014 (SR-EDGA-2014-16) 
(``Shatto Letter'') (letter commenting on companion EDGA filing that 
proposes to offer the same feed).
    \35\ See Securities Exchange Act Release No. 73099 (September 
15, 2014), 79 FR 56418 (September 19, 2014).
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    The thrust of the SIFMA Letter is aimed at the proposed fees which 
are being removed from this proposed rule change and are to be filed 
with the Commission via a separate rule filing. While the SIFMA Letter 
correctly states that the Exchange has marketed the BATS One Feed since 
August 1, 2014, the SIFMA Letter incorrectly asserts that the Exchange 
has offered the BATS One Feed since that same date. All of the 
Exchange's marketing materials have included statements that the BATS 
One Feed's implementation was pending to SEC approval, and at no point 
has the Exchange offered the BATS One product for any use other than 
for testing and certification.

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 of such 
date (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 Exchange consents, the Commission shall:
    (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-2014-25 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-2014-25. 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 EDGX. 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-2014-25 and should be 
submitted on or before December 11, 2014.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27446 Filed 11-19-14; 8:45 am]
BILLING CODE 8011-01-P