Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc., 28322-28325 [2015-11878]

Download as PDF 28322 Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Notices 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–CBOE– 2015–046 and should be submitted on or before June 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–11877 Filed 5–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74938; File No. SR–BATS– 2015–35] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. asabaliauskas on DSK5VPTVN1PROD with NOTICES May 12, 2015. 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 May 1, 2015, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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. 25 17 CFR 200.30–3(a)(12). 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). 1 15 VerDate Sep<11>2014 18:52 May 15, 2015 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 BATS Rules 15.1(a) and (c). Changes to the fee schedule pursuant to this proposal are effective upon filing. 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 its fee schedule in order to: (1) Amend the rebate associated with fee code BY; (2) eliminate the NBBO Setter and Joiner Tiers; (3) establish a Single MPID Investor Tier; and (4) simplify pricing related to Physical Connection Fees. Fee Code BY The Exchange currently provides a rebate of $0.0016 per share for Members’ orders that yield fee code BY, which routes to BYX and removes liquidity using Destination Specific, TRIM, TRIM2, TRIM3, or SLIM routing strategies. The Exchange proposes to amend its Fee Schedule to decrease the rebate for orders that yield fee code BY to $0.0015 per share. The proposed change represents a pass through of the rate BATS Trading, Inc. (‘‘BATS Trading’’), the Exchange’s affiliated routing broker-dealer, is provided for routing orders to BYX that remove liquidity. The proposed change is in 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). Jkt 235001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 response to BYX’s May 2015 fee change where BYX decreased its rebate from $0.0016 per share to $0.0015 per share.6 When BATS Trading routes to and removes liquidity from BYX, it will now receive a standard rebate of $0.0015 per share. BATS Trading will pass through the rebate provided by BYX to the Exchange and the Exchange, in turn, will pass through this rate to its Members. NBBO Setter and Joiner Tiers The Exchange currently offers an additional rebate per share for certain orders that establish a new NBBO or that join the NBBO when the Exchange is not already at the NBBO. Such additional rebates range from $0.0001 per share to $0.0005 per share. The Exchange is proposing to eliminate these additional rebates because the rebates have not achieved the desired effect, despite being designed to incentivize Members to add liquidity that sets or joins the Exchange to the NBBO. As such, the Exchange is proposing to eliminate the text in footnote four related to the NBBO Setter and Joiner Tiers. Single MPID Investor Tier The Exchange proposes to add new text to footnote four to establish a new Investor Tier under which a Member can qualify for a rebate of $0.0031 per share on an MPID by MPID basis if they meet the following criteria: (i) The MPID’s ADAV 7 as a percentage of TCV 8 is equal to or greater than 0.35%; and (ii) the MPID’s ADAV as a percentage of ADV 9 is equal to or greater than 90%. The Exchange notes that this proposal is substantively identical to the ‘‘Investor Tier’’ rebate offered on EDGX Exchange, Inc. (‘‘EDGX’’).10 Physical Connection Fees The Exchange currently maintains a presence in two third-party data centers: (i) The primary data center where the Exchange’s business is primarily conducted on a daily basis, and (ii) a 6 See BYX Exchange Fee Schedule Changes Effective May 1, 2015 available at https:// cdn.batstrading.com/resources/fee_schedule/2015/ BATS-BYX-Exchange-BZX-Exchange-EDGAExchange-and-EDGX-Exchange-Fee-ScheduleChanges-Effective-May-1-2015.pdf. 7 ‘‘ADAV’’ means average daily volume calculated as the number of shares added per day. 8 ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges to the consolidated transaction reporting plan for the month for which the fees apply. 9 ‘‘ADV’’ means average daily volume calculated as the number of shares added or removed, combined, per day. 10 See EDGX Exchange, Inc. Fee Schedule available at https://www.batstrading.com/support/ fee_schedule/edgx/. E:\FR\FM\18MYN1.SGM 18MYN1 Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Notices secondary data center, which is predominantly maintained for business continuity purposes. The Exchange currently assesses fees to Members and non-Members of $1,000 for any 1G physical port connection at either data center and of $2,500 for any 10G physical port connection at either data center. The Exchange also provides market participants with the ability to access the Exchange’s network through another data center entry point, or Point of Presence (‘‘PoP’’), at a data center other than the Exchange’s primary or secondary data center.11 The Exchange currently charges $2,000 for any 1G physical port to connect to the Exchange in any data center where the Exchange maintains a PoP other than the Exchange’s primary or secondary data center and $5,000 per month for each single physical 10G port provided by the Exchange to any Member or nonmember in any data center where the Exchange maintains a PoP other than the Exchange’s primary or secondary data center. The Exchange proposes to simplify its pricing structure by imposing a uniform rate for physical ports regardless of the data center in which the port connection is made. Specifically, the Exchange proposes to charge $1,000 per month for all 1G physical port connections and $2,500 per month for all 10G physical ports in any location where the Exchange offers the ability to connect to Exchange systems, including the secondary data center and any PoP location. In conjunction with the proposed change, the Exchange also proposes minor changes to re-format the chart that sets forth physical connection fees and also proposes to re-locate such chart and the accompanying text such that physical connection fees directly follow logical port fees. asabaliauskas on DSK5VPTVN1PROD with NOTICES Implementation Date The Exchange proposes to implement the amendments to its fee schedule effective immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,12 in general, and furthers the objectives of Section 6(b)(4),13 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and 11 See Securities Exchange Act Release No. 70199 (August 14, 2013), 78 FR 51250 (August 20, 2013) (SR–BATS–2013–036) (Order Approving a Proposed Rule Change to Introduce a Connectivity Option Through Points of Presence). 12 15 U.S.C. 78f. 13 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 18:52 May 15, 2015 Jkt 235001 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 Exchange believes that the proposed rates are equitable and non-discriminatory in that they apply uniformly to all Members. Fee Code BY The Exchange believes that its proposal to decrease the rebate for orders that yield fee code BY represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. Prior to the BYX’s May 2015 fee change, BYX provided BATS Trading a rebate of $0.0016 per share to remove liquidity, which BATS Trading passed through to the Exchange and the Exchange provided its Members. When BATS Trading routes to BYX, it will now be provided a rebate of $0.0015 per share. The Exchange does not levy additional fees or offer additional rebates for orders that it routes to BYX through BATS Trading. Therefore, the Exchange believes that the proposed change to fee code BY is equitable and reasonable because it accounts for the pricing changes on BYX, which enables the Exchange to provide its Members the applicable pass-through rebate. Lastly, the Exchange notes that routing through BATS Trading is voluntary and believes that the proposed change is non-discriminatory because it would apply uniformly to all Members. NBBO Setter and Joiner Tiers The Exchange believes that the proposed elimination of the NBBO Setter and Joiner Tiers represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities because, as described above, the additional rebates offered under these tiers are not affecting Members’ behavior in the manner originally conceived by the Exchange. While the Exchange acknowledges the benefit of Members entering orders that set or join the NBBO, the Exchange has generally determined that it is providing additional rebates for liquidity that would be added on the Exchange regardless of whether the tiers existed. By paying these rebates, the Exchange is not only offering rebates for orders that would set or join the NBBO without being incentivized to do so, but also missing out on the opportunity to offer other rebates or reduced fees that could incentivize other behavior that would enhance market quality on the PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 28323 Exchange, which would benefit all Members. As such, the Exchange also believes that the proposed elimination of the NBBO Setter and Joiner Tiers would be non-discriminatory in that it currently applies equally to all Members and, upon elimination, would no longer be available to any Members. Further, it will allow the Exchange to explore other ways in which it may enhance market quality for all Members. Single MPID Investor Tier The Exchange believes that the proposed addition of the Single MPID Investor Tier represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities because it rewards Members with order flow characteristics that contribute meaningfully to price discovery on the Exchange. In other words, Members that post a substantial amount of liquidity and primarily post liquidity are valuable Members to the Exchange and the marketplace in terms of liquidity provision. By applying the tier on a single MPID rather than across a Member’s entire trading activity, the Exchange is also allowing more Members to potentially receive the enhanced rebates for their trading activity related to liquidity provision. The Single MPID Investor Tier also encourages Members to primarily add liquidity in order to satisfy the ADAV as a percentage of ADV of at least 90%. Such increased volume increases potential revenue to the Exchange, and would allow the Exchange to spread its administrative and infrastructure costs over a greater number of shares, leading to lower per share costs. These lower per share costs would allow the Exchange to pass on the savings to Members in the form of higher rebates. The increased liquidity also benefits all investors by deepening the Exchange’s liquidity pool, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. Volume-based rebates such as the ones proposed herein have been widely adopted in the cash equities markets, and are equitable because they are open to all Members on an equal basis and provide discounts that are reasonably related to the value to an exchange’s market quality associated with higher levels of market activity, such as higher levels of liquidity provision and introduction of higher volumes of orders into the price and volume discovery processes. In addition, the rebate is also reasonable in that other exchanges E:\FR\FM\18MYN1.SGM 18MYN1 28324 Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Notices likewise employ similar pricing mechanisms. For example, EDGX offers a substantively identical investor tier that provides enhanced rebates for its members that meet certain thresholds that are based on the same metrics proposed by the Exchange, which are designed to encourage price discovery and market transparency. As stated above, EDGX’s investor tier is substantively identical to the Single MPID Investor Tier proposed by the Exchange except that on EDGX a member will receive a $0.0032 per share rebate for orders that add liquidity where the member has an ADAV of at least 0.15% of TCV and an ADAV as a percentage of ADV of at least 85%. Finally, the Exchange also believes that the proposed Single MPID Investor Tier is non-discriminatory in that it would apply equally to all Members. The Exchange believes that providing uniform rates for all 1G and 10G physical connections to Exchange is reasonable because such change represents a reduction in fees for any Member that connects to the Exchange at a PoP location and no change to fees for any Member located in the Exchange’s primary or secondary data center. The Exchange also believes that the proposal is equitably allocated and not unreasonably discriminatory because, as proposed, market participants will be able to access the Exchange at uniform rates regardless of whether such access is at the Exchange’s primary or secondary data center location or another location where the Exchange offers access. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe its proposed amendments to its fee schedule would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. asabaliauskas on DSK5VPTVN1PROD with NOTICES Fee Code BY The Exchange believes that its proposal to pass through the amended rebate for orders that yield fee code BY would increase intermarket competition because it offers customers an alternative means to route to BYX for the same rebate that they would be provided if they entered orders on that trading center directly. The Exchange believes that its proposal would not burden intramarket competition because the proposed rebate would apply uniformly to all Members. 18:52 May 15, 2015 The Exchange does not believe that its proposal to eliminate the NBBO Setter and Joiner Tiers would burden competition, but, rather, enhance the Exchange’s ability to compete with other market centers. As described above, the Exchange believes that it is offering enhanced rebates for orders that would be submitted to the Exchange without the enhanced rebate, which prevents the Exchange from being able to offer other rebates or reduced fees that might be able to enhance market quality to the benefit of all Members. As such, eliminating the NBBO Setter and Joiner Tiers will allow the Exchange other opportunities to enhance market quality on the Exchange and ultimately, better compete with other market centers. Single MPID Investor Tier Physical Connection Fees VerDate Sep<11>2014 NBBO Setter and Joiner Tiers Jkt 235001 The Exchange believes that its proposal to adopt the Single MPID Investor Tier would increase intramarket competition by rewarding Members with order flow characteristics that contribute meaningfully to price discovery on the Exchange. In other words, the proposal is a competitive proposal in that it is designed to incentivize the entry of orders to the Exchange that will provide liquidity to other Members. The Exchange does not believe that its proposal would burden intramarket competition because the proposed rebate would apply uniformly to all Members that achieve the objective criteria of the Single MPID Investor Tier. Physical Connection Fees The Exchange does not believe that the proposed change to physical port fees represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange’s competitors. Rather, as described above, the Exchange is simply normalizing its fees for physical access to the Exchange regardless of the location where a physical connection is made. The offering is consistent with the Exchange’s own economic incentives to facilitate as many market participants as possible in connecting to its market. 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. The Exchange does not believe that its proposal would burden intramarket competition because the fees for physical connections would apply uniformly to all Members. PO 00000 Frm 00106 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 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. 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– BATS–2015–35 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. All submissions should refer to File Number SR–BATS–2015–35. 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 14 15 15 17 E:\FR\FM\18MYN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 18MYN1 Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Notices 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 also will be available for inspection and copying at the principal offices 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–BATS– 2015–35, and should be submitted on or before June 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–11878 Filed 5–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION asabaliauskas on DSK5VPTVN1PROD with NOTICES Sunshine Act Meeting Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94–409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, May 20, 2015 at 10:00 a.m., in the Auditorium, Room L–002. The subject matters of the Open Meeting will be: • The Commission will consider whether to propose new rules and forms and amendments to current rules and forms to modernize the reporting and disclosure of information by registered investment companies. • The Commission will consider whether to propose form and rule amendments to require investment advisers to provide additional information concerning their operations, require the maintenance of performance records, and remove outdated transition provisions from rules. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted, or postponed, please contact: 16 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:52 May 15, 2015 Jkt 235001 The Office of the Secretary at (202) 551–5400. Dated: May 13, 2015. Brent J. Fields, Secretary. [FR Doc. 2015–12067 Filed 5–14–15; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74934; File No. SR–BX– 2015–015] Self-Regulatory Organizations; NASDAQ OMX BX Inc.; Notice of Designation of Longer Period for Commission Action on Proposed Rule Change To Amend and Restate Certain Rules That Govern the NASDAQ OMX BX Equities Market 28325 rule change so that it has sufficient time to consider the proposed rule change. Accordingly, pursuant to Section 19(b)(2) of the Act 5 and for the reasons stated above, the Commission designates July 5, 2015, as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–11875 Filed 5–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION May 12, 2015. On March 20, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend and restate certain BX rules that govern the BX Equities Market in order to provide a clearer and more detailed description of certain aspects of its functionality. The proposed rule change was published for comment in the Federal Register on April 6, 2015.3 The Commission received no comment letters regarding the proposed rule change. Section 19(b)(2) of the Act 4 provides that within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is May 21, 2015. The Commission is extending the 45day time period for Commission action on the proposed rule change. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed [Release No. 34–74926; File No. SR–DTC– 2015–005] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Technical Revisions to the DTC Custody Service Guide and the DTC Deposits Service Guide May 12, 2015. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) and Rule 19b–4 2 thereunder, notice is hereby given that on April 30, 2015, The Depository Trust Company (‘‘DTC’’) 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 DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A) 3 of the Act and Rule 19b–4(f)(4) 4 thereunder. The proposed rule change was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of technical revisions to the: (i) DTC Custody Service Guide (‘‘Custody Guide’’) and (ii) DTC Deposits Service 5 15 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 74617 (March 31, 2015), 80 FR 18473. 4 15 U.S.C. 78s(b)(2). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 U.S.C. 78s(b)(2). CFR 200.30–3(a)(31). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(4). 6 17 E:\FR\FM\18MYN1.SGM 18MYN1

Agencies

[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Notices]
[Pages 28322-28325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11878]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74938; File No. SR-BATS-2015-35]


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

May 12, 2015.
    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 May 1, 2015, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``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 the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to BATS Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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    \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).
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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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify its fee schedule in order to: (1) 
Amend the rebate associated with fee code BY; (2) eliminate the NBBO 
Setter and Joiner Tiers; (3) establish a Single MPID Investor Tier; and 
(4) simplify pricing related to Physical Connection Fees.
Fee Code BY
    The Exchange currently provides a rebate of $0.0016 per share for 
Members' orders that yield fee code BY, which routes to BYX and removes 
liquidity using Destination Specific, TRIM, TRIM2, TRIM3, or SLIM 
routing strategies. The Exchange proposes to amend its Fee Schedule to 
decrease the rebate for orders that yield fee code BY to $0.0015 per 
share. The proposed change represents a pass through of the rate BATS 
Trading, Inc. (``BATS Trading''), the Exchange's affiliated routing 
broker-dealer, is provided for routing orders to BYX that remove 
liquidity. The proposed change is in response to BYX's May 2015 fee 
change where BYX decreased its rebate from $0.0016 per share to $0.0015 
per share.\6\ When BATS Trading routes to and removes liquidity from 
BYX, it will now receive a standard rebate of $0.0015 per share. BATS 
Trading will pass through the rebate provided by BYX to the Exchange 
and the Exchange, in turn, will pass through this rate to its Members.
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    \6\ See BYX Exchange Fee Schedule Changes Effective May 1, 2015 
available at https://cdn.batstrading.com/resources/fee_schedule/2015/BATS-BYX-Exchange-BZX-Exchange-EDGA-Exchange-and-EDGX-Exchange-Fee-Schedule-Changes-Effective-May-1-2015.pdf.
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NBBO Setter and Joiner Tiers
    The Exchange currently offers an additional rebate per share for 
certain orders that establish a new NBBO or that join the NBBO when the 
Exchange is not already at the NBBO. Such additional rebates range from 
$0.0001 per share to $0.0005 per share. The Exchange is proposing to 
eliminate these additional rebates because the rebates have not 
achieved the desired effect, despite being designed to incentivize 
Members to add liquidity that sets or joins the Exchange to the NBBO. 
As such, the Exchange is proposing to eliminate the text in footnote 
four related to the NBBO Setter and Joiner Tiers.
Single MPID Investor Tier
    The Exchange proposes to add new text to footnote four to establish 
a new Investor Tier under which a Member can qualify for a rebate of 
$0.0031 per share on an MPID by MPID basis if they meet the following 
criteria: (i) The MPID's ADAV \7\ as a percentage of TCV \8\ is equal 
to or greater than 0.35%; and (ii) the MPID's ADAV as a percentage of 
ADV \9\ is equal to or greater than 90%. The Exchange notes that this 
proposal is substantively identical to the ``Investor Tier'' rebate 
offered on EDGX Exchange, Inc. (``EDGX'').\10\
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    \7\ ``ADAV'' means average daily volume calculated as the number 
of shares added per day.
    \8\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges to the consolidated transaction 
reporting plan for the month for which the fees apply.
    \9\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day.
    \10\ See EDGX Exchange, Inc. Fee Schedule available at https://www.batstrading.com/support/fee_schedule/edgx/.
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Physical Connection Fees
    The Exchange currently maintains a presence in two third-party data 
centers: (i) The primary data center where the Exchange's business is 
primarily conducted on a daily basis, and (ii) a

[[Page 28323]]

secondary data center, which is predominantly maintained for business 
continuity purposes. The Exchange currently assesses fees to Members 
and non-Members of $1,000 for any 1G physical port connection at either 
data center and of $2,500 for any 10G physical port connection at 
either data center. The Exchange also provides market participants with 
the ability to access the Exchange's network through another data 
center entry point, or Point of Presence (``PoP''), at a data center 
other than the Exchange's primary or secondary data center.\11\ The 
Exchange currently charges $2,000 for any 1G physical port to connect 
to the Exchange in any data center where the Exchange maintains a PoP 
other than the Exchange's primary or secondary data center and $5,000 
per month for each single physical 10G port provided by the Exchange to 
any Member or non-member in any data center where the Exchange 
maintains a PoP other than the Exchange's primary or secondary data 
center.
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    \11\ See Securities Exchange Act Release No. 70199 (August 14, 
2013), 78 FR 51250 (August 20, 2013) (SR-BATS-2013-036) (Order 
Approving a Proposed Rule Change to Introduce a Connectivity Option 
Through Points of Presence).
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    The Exchange proposes to simplify its pricing structure by imposing 
a uniform rate for physical ports regardless of the data center in 
which the port connection is made. Specifically, the Exchange proposes 
to charge $1,000 per month for all 1G physical port connections and 
$2,500 per month for all 10G physical ports in any location where the 
Exchange offers the ability to connect to Exchange systems, including 
the secondary data center and any PoP location. In conjunction with the 
proposed change, the Exchange also proposes minor changes to re-format 
the chart that sets forth physical connection fees and also proposes to 
re-locate such chart and the accompanying text such that physical 
connection fees directly follow logical port fees.
Implementation Date
    The Exchange proposes to implement the amendments to its fee 
schedule effective immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ 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 Exchange believes that the proposed rates 
are equitable and non-discriminatory in that they apply uniformly to 
all Members.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Fee Code BY
    The Exchange believes that its proposal to decrease the rebate for 
orders that yield fee code BY represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities. Prior to the BYX's May 2015 fee change, 
BYX provided BATS Trading a rebate of $0.0016 per share to remove 
liquidity, which BATS Trading passed through to the Exchange and the 
Exchange provided its Members. When BATS Trading routes to BYX, it will 
now be provided a rebate of $0.0015 per share. The Exchange does not 
levy additional fees or offer additional rebates for orders that it 
routes to BYX through BATS Trading. Therefore, the Exchange believes 
that the proposed change to fee code BY is equitable and reasonable 
because it accounts for the pricing changes on BYX, which enables the 
Exchange to provide its Members the applicable pass-through rebate. 
Lastly, the Exchange notes that routing through BATS Trading is 
voluntary and believes that the proposed change is non-discriminatory 
because it would apply uniformly to all Members.
NBBO Setter and Joiner Tiers
    The Exchange believes that the proposed elimination of the NBBO 
Setter and Joiner Tiers represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities because, as described above, the 
additional rebates offered under these tiers are not affecting Members' 
behavior in the manner originally conceived by the Exchange. While the 
Exchange acknowledges the benefit of Members entering orders that set 
or join the NBBO, the Exchange has generally determined that it is 
providing additional rebates for liquidity that would be added on the 
Exchange regardless of whether the tiers existed. By paying these 
rebates, the Exchange is not only offering rebates for orders that 
would set or join the NBBO without being incentivized to do so, but 
also missing out on the opportunity to offer other rebates or reduced 
fees that could incentivize other behavior that would enhance market 
quality on the Exchange, which would benefit all Members. As such, the 
Exchange also believes that the proposed elimination of the NBBO Setter 
and Joiner Tiers would be non-discriminatory in that it currently 
applies equally to all Members and, upon elimination, would no longer 
be available to any Members. Further, it will allow the Exchange to 
explore other ways in which it may enhance market quality for all 
Members.
Single MPID Investor Tier
    The Exchange believes that the proposed addition of the Single MPID 
Investor Tier represents an equitable allocation of reasonable dues, 
fees, and other charges among Members and other persons using its 
facilities because it rewards Members with order flow characteristics 
that contribute meaningfully to price discovery on the Exchange. In 
other words, Members that post a substantial amount of liquidity and 
primarily post liquidity are valuable Members to the Exchange and the 
marketplace in terms of liquidity provision. By applying the tier on a 
single MPID rather than across a Member's entire trading activity, the 
Exchange is also allowing more Members to potentially receive the 
enhanced rebates for their trading activity related to liquidity 
provision. The Single MPID Investor Tier also encourages Members to 
primarily add liquidity in order to satisfy the ADAV as a percentage of 
ADV of at least 90%. Such increased volume increases potential revenue 
to the Exchange, and would allow the Exchange to spread its 
administrative and infrastructure costs over a greater number of 
shares, leading to lower per share costs. These lower per share costs 
would allow the Exchange to pass on the savings to Members in the form 
of higher rebates. The increased liquidity also benefits all investors 
by deepening the Exchange's liquidity pool, offering additional 
flexibility for all investors to enjoy cost savings, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection. Volume-based rebates such as the ones proposed 
herein have been widely adopted in the cash equities markets, and are 
equitable because they are open to all Members on an equal basis and 
provide discounts that are reasonably related to the value to an 
exchange's market quality associated with higher levels of market 
activity, such as higher levels of liquidity provision and introduction 
of higher volumes of orders into the price and volume discovery 
processes.
    In addition, the rebate is also reasonable in that other exchanges

[[Page 28324]]

likewise employ similar pricing mechanisms. For example, EDGX offers a 
substantively identical investor tier that provides enhanced rebates 
for its members that meet certain thresholds that are based on the same 
metrics proposed by the Exchange, which are designed to encourage price 
discovery and market transparency. As stated above, EDGX's investor 
tier is substantively identical to the Single MPID Investor Tier 
proposed by the Exchange except that on EDGX a member will receive a 
$0.0032 per share rebate for orders that add liquidity where the member 
has an ADAV of at least 0.15% of TCV and an ADAV as a percentage of ADV 
of at least 85%. Finally, the Exchange also believes that the proposed 
Single MPID Investor Tier is non-discriminatory in that it would apply 
equally to all Members.
Physical Connection Fees
    The Exchange believes that providing uniform rates for all 1G and 
10G physical connections to Exchange is reasonable because such change 
represents a reduction in fees for any Member that connects to the 
Exchange at a PoP location and no change to fees for any Member located 
in the Exchange's primary or secondary data center. The Exchange also 
believes that the proposal is equitably allocated and not unreasonably 
discriminatory because, as proposed, market participants will be able 
to access the Exchange at uniform rates regardless of whether such 
access is at the Exchange's primary or secondary data center location 
or another location where the Exchange offers access.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendments to its fee 
schedule would impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act.
Fee Code BY
    The Exchange believes that its proposal to pass through the amended 
rebate for orders that yield fee code BY would increase intermarket 
competition because it offers customers an alternative means to route 
to BYX for the same rebate that they would be provided if they entered 
orders on that trading center directly. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rebate would apply uniformly to all Members.
NBBO Setter and Joiner Tiers
    The Exchange does not believe that its proposal to eliminate the 
NBBO Setter and Joiner Tiers would burden competition, but, rather, 
enhance the Exchange's ability to compete with other market centers. As 
described above, the Exchange believes that it is offering enhanced 
rebates for orders that would be submitted to the Exchange without the 
enhanced rebate, which prevents the Exchange from being able to offer 
other rebates or reduced fees that might be able to enhance market 
quality to the benefit of all Members. As such, eliminating the NBBO 
Setter and Joiner Tiers will allow the Exchange other opportunities to 
enhance market quality on the Exchange and ultimately, better compete 
with other market centers.
Single MPID Investor Tier
    The Exchange believes that its proposal to adopt the Single MPID 
Investor Tier would increase intramarket competition by rewarding 
Members with order flow characteristics that contribute meaningfully to 
price discovery on the Exchange. In other words, the proposal is a 
competitive proposal in that it is designed to incentivize the entry of 
orders to the Exchange that will provide liquidity to other Members. 
The Exchange does not believe that its proposal would burden 
intramarket competition because the proposed rebate would apply 
uniformly to all Members that achieve the objective criteria of the 
Single MPID Investor Tier.
Physical Connection Fees
    The Exchange does not believe that the proposed change to physical 
port fees represents a significant departure from previous pricing 
offered by the Exchange or pricing offered by the Exchange's 
competitors. Rather, as described above, the Exchange is simply 
normalizing its fees for physical access to the Exchange regardless of 
the location where a physical connection is made. The offering is 
consistent with the Exchange's own economic incentives to facilitate as 
many market participants as possible in connecting to its market. 
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. The Exchange does 
not believe that its proposal would burden intramarket competition 
because the fees for physical connections 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 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 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-BATS-2015-35 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.

All submissions should refer to File Number SR-BATS-2015-35. 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

[[Page 28325]]

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 also will be available for inspection and copying at the 
principal offices 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-BATS-2015-35, and should be submitted on or before June 
8, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-11878 Filed 5-15-15; 8:45 am]
 BILLING CODE 8011-01-P
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