Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats EDGA Exchange, Inc., 18516-18519 [2017-07869]

Download as PDF 18516 Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices jstallworth on DSK7TPTVN1PROD with NOTICES identified its current dichotomy-based algorithm as a source of operational risk, based on its observation of the algorithm as an operationally intensive and time consuming practice. LCH SA believes that the new pricing method as described in the proposed rule change is reasonably designed to minimize operational risk and eliminate possible delays existing in the current overnight batch process as a result of the dichotomy-based algorithm in the event of extreme spread curves that cause the ISDA Pricer to fail. In addition, LCH SA has performed analysis comparing its approximation method to the ISDA Pricer and the results indicate that its approximation method provides a reliable pricing estimate. Therefore, LCH SA believes that the proposed rule change is reasonably designed to minimize or mitigate the operational risk identified by LCH SA through the use of appropriate systems and policies, consistent with Rule 17Ad–22(d)(4) and Rule 17Ad–22(e)(17). The proposed rule change is also consistent with Rule 17Ad–22(b)(1) and (2),6 which require a clearing agency to maintain margin and limit a clearing agency’s exposures to potential losses from participants’ defaults under normal market conditions, and Rule 17Ad–22(e)(4),7 which requires a covered clearing agency to manage credit exposures to participants by maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. LCH SA has performed analysis to support the new pricing method for extreme spread curves as a reliable pricing tool to use in its margin methodology in the event of extreme spread curves that cause the ISDA Pricer to fail, and, therefore, believes that the proposed rule change would continue to cause LCH SA to maintain margin to cover its credit exposure to, and to limit its exposures to potential losses, each Clearing Member’s defaults [sic] under normal market conditions with a high degree of confidence. B. Clearing Agency’s Statement on Burden on Competition Section 17A(b)(3)(I) of the Act requires that the rules of a clearing agency not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.8 The proposed rule change is part of the spread margin calculation, which will uniformly apply across all participants and, as noted 6 17 CFR 240.17Ad–22(b)(1)–(2). CFR 240.17Ad–22(e)(4). 8 15 U.S.C. 78q–1(b)(3)(I). 7 17 VerDate Sep<11>2014 15:06 Apr 18, 2017 Jkt 241001 above, is consistent with the applicable requirements of the Act, eliminates operational risk and provides reliable pricing of CDS in the event that the ISDA Pricer fails. Therefore, LCH SA does not believe the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule change have not been solicited or received. LCH SA will notify the Commission of any written comments received by LCH SA. 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 (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 self-regulatory organization consents, the Commission will: (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– LCH SA–2017–004 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–LCH SA–2017–004. 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 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 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 such filings will also be available for inspection and copying at the principal office of LCH SA and on LCH SA’s Web site at https://www.lch.com/assetclasses/cdsclear. 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–LCH SA–2017–004 and should be submitted on or before May 10, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Brent J. Fields, Secretary. [FR Doc. 2017–07873 Filed 4–18–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80448; File No. SR– BatsEDGA–2017–06] Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats EDGA Exchange, Inc. April 13, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 31, 2017, Bats EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\19APN1.SGM 19APN1 Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-members of the Exchange pursuant to EDGA Rules 15.1(a) and (c). The text of the proposed rule change is available at the Exchange’s Web site at www.bats.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule for its equity platform (‘‘EDGA Equities’’) to: (i) Adopt fee code PL, modify fee codes PA, PT, and PX, as well as the RMPT Tier under footnote 3 to provide fees for the recently implemented RMPL routing strategy; and (ii) modify the descriptions of fee codes MM and MT. jstallworth on DSK7TPTVN1PROD with NOTICES Fees for RMPL Routing Strategy The Exchange recently implemented a new midpoint routing strategy known as 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 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). 4 17 VerDate Sep<11>2014 15:06 Apr 18, 2017 Jkt 241001 RMPL 6 under which a MidPoint Peg Order 7 first checks the System 8 for available shares and routes any remaining shares to destinations on the System routing table 9 that support midpoint eligible orders. If any shares remain unexecuted after routing, they are posted on the EDGA Book 10 as MidPoint Peg Orders, unless otherwise instructed by the User.11 As a result of this additional functionality, the Exchange proposes to amend its fee schedule to adopt fees which would apply to orders routed pursuant to the RMPL routing strategy. Fee Code PL. The Exchange proposes to adopt fee code PL, which would apply to orders routed to Bats BZX Exchange, Inc. (‘‘BZX’’), Bats EDGX Exchange, Inc. (‘‘EDGX’’), the New York Stock Exchange, Inc. (‘‘NYSE’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), or Nasdaq Stock Market LLC (‘‘Nasdaq’’) using a RMPL routing strategy. Orders that yield fee code PL would be charged a fee of $0.0030 per share in securities priced at or above $1.00 and 0.30% of the trade’s total dollar value in securities priced below $1.00. Fee Codes PA, PT, PX, and RMPT Tier. The RMPT routing strategy operates similarly to RMPL in that under both Mid-Point Peg Orders check the System for available shares and any remaining shares are then sent to destinations on the System routing table that support midpoint eligible orders. If 6 See Securities Exchange Act Release No. 79596 (December 19, 2016), 81 FR 94454 (December 26, 2016) (SR–BatsEDGA–2016–34) (‘‘RMPL Filing’’). 7 In sum, a MidPoint Peg Order is a non-displayed Market Order or Limit Order with an instruction to execute at the midpoint of the NBBO, or, alternatively, pegged to the less aggressive of the midpoint of the NBBO or one minimum price variation inside the same side of the NBBO as the order. See Exchange Rule 11.8(d). 8 The term ‘‘System’’ is defined as ‘‘the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.’’ See Exchange Rule 1.5(cc). 9 The term ‘‘System routing table’’ refers to the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them. See Exchange Rule 11.11(g). While the process for determining the specific trading venues to which orders are routed is proprietary, the Exchange publicly discloses the trading venues associated with each routing strategy via its Web site at https:// cdn.batstrading.com/resources/features/bats_ exchange_routing-strategies.pdf. 10 The term ‘‘EDGA Book’’ is defined as the ‘‘System’s electronic file of orders.’’ See Exchange Rule 1.5(d). The Exchange also proposed to capitalize the word ‘‘Book’’ within Rule 11.11(g)(13) as the term EDGA Book is a defined term in the Exchange’s Rules. 11 The term ‘‘User’’ is defined as ‘‘any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3.’’ See Exchange Rule 1.5(ee). PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 18517 any shares remain unexecuted after routing, they are posted on the EDGA Book as a Mid-Point Peg Order, unless otherwise instructed by the User. While RMPL and RMPT operate in an identical manner, the trading venues that each routing strategy routes to and the order in which it routes them differ. Due to the identical behavior of RMPT and RMPL routing options, the Exchange proposes to amend fee Codes PA, PT, PX, and RMPT Tier, all of which set forth fees for the RMPT routing strategy, to also provide fees for the RMPL routing strategy. Each of these changes are as follows: • Fee Code PA. Currently, fee code PA only applies to orders which add liquidity to the Exchange using a RMPT routing strategy. Orders that yield fee code PA are assessed a fee of $0.0008 per share in securities priced at or above $1.00 and are not assessed a fee in securities below $1.00. The Exchange now proposes modify the application of fee code PA not only apply to RMPT, but to also apply RMPL. The Exchange does not propose to modify the fee associated with PA. • Fee Code PT. Currently, fee code PT only applies to orders which remove liquidity on the Exchange using a RMPT routing strategy. Orders that yield fee code PT are assessed a fee of $0.0010 per share in securities priced at or above $1.00 and are not assessed a fee in securities below $1.00. The Exchange now proposes modify the application of fee code PT not only apply to RMPT, but to also apply RMPL. The Exchange does not propose to modify the fee associated with PT. • Fee Code PX. Currently, fee code PX only applies to orders routed using a RMPT routing strategy. Order that yield fee code PX are assessed a fee of $0.0012 per share in securities priced at or above $1.00 and 0.30% of the trade’s total dollar value in securities priced below $1.00. The Exchange now proposes modify the application of fee code PX not only apply to RMPT, but to also apply RMPL. However, fee code PX would only apply to orders routed to destinations not covered by fee code PL using the RMPL routing strategy, as set forth above. The Exchange does not propose to modify the fee associated with PX. • RMPT Tier Under Footnote 3. Currently, the Exchange offers one RMPT Tier under which a Member may receive a discounted fee of $0.0008 per share for orders yielding fee codes PT or PX where that Member adds or removes E:\FR\FM\19APN1.SGM 19APN1 18518 Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices an ADV 12 greater than or equal to 2,000,000 shares using a the RMPT routing strategy. The Exchange now proposes to amend the RMPT Tier to allow the Member’s ADV to also include shares that use the RMPL routing strategy. The Exchange does not propose to modify the fee associated with PT. Fee Codes MM and MT The Exchange proposes to amend the descriptions of fee code MM and MT to align with the description of similar fee codes of its affiliated exchanges.13 Fee code MM is [sic] applies to NonDisplayed 14 orders that add liquidity at the midpoint of the national best bid and offer (‘‘NBBO’’) while fee code MT is [sic] applies to Non-Displayed orders that remove liquidity at the midpoint of the NBBO. Orders that yield fee code MM or MT are charged a fee of $0.00080 per share in securities priced at or above $1.00 and 0.08% of the trade’s total dollar value in securities priced below $1.00. To align the description of fee codes MM and MT with similar fee codes of its affiliated exchanges,15 the Exchange proposes to amend their descriptions as follows. Fee code MM would now state that is applies to Nondisplayed orders that add liquidity using Mid-Point Peg order type. Fee code MT would now state that is applies to Non-displayed orders that remove liquidity using Mid-Point Peg order type. The proposed changes do not alter the types of orders to which the fee codes would apply. The Exchange does not propose to modify the fee associated with MM and MT. Implementation Date The Exchange proposes to implement the above changes to its fee schedule on April 3, 2017. 2. Statutory Basis jstallworth on DSK7TPTVN1PROD with NOTICES The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,16 in general, and furthers the objectives of 12 ADV is generally defined as average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. See the Exchange’s fee schedule available at https:// www.bats.com/us/equities/membership/fee_ schedule/edga/. 13 The Exchange’s affiliates are Bats EDGX Exchange, Inc. (‘‘EDGX’’), Bats BYX Exchange, Inc., (‘‘BYX’’), and Bats BZX Exchange, Inc. (‘‘BZX’’). 14 See Exchange Rule 11.6(e)(2). 15 See e.g., fee codes MM and MT on the BYX fee schedule available at https://www.bats.com/us/ equities/membership/fee_schedule/byx/; and fee code MM on the EDGX fee schedule available at https://www.bats.com/us/equities/membership/fee_ schedule/edgx/. 16 15 U.S.C. 78f. VerDate Sep<11>2014 15:06 Apr 18, 2017 Jkt 241001 Section 6(b)(4),17 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. Fees for RMPL Routing Strategy The Exchange believes the proposed fee code PL and the expansion of fee codes PA, PT and PX as well as the RMPT Tier to adopt fees for orders routed using the options RMPL routing strategy represents an equitable allocation of reasonable dues, fees. The proposed fee code structure would enable the Exchange to charge a rate reasonably related to the rate that Bats Trading, Inc. (‘‘Bats Trading’’), the Exchange’s affiliated routing brokerdealer, would be charged for routing orders to destinations described in fee codes PL, PA, PT and PX when it does not qualify for a volume tier reduced fee. As a result, when Bats Trading is charged a fee when it routes an order which removes liquidity from a destination described in fee codes PL, PA, PT and PX.18 Bats Trading will pass through these rates to the Exchange and the Exchange, in turn, will charge the rates under fee codes PL, PA, PT and PX, as applicable. The proposed fee under fee codes PL, PA, PT and PX for orders routed pursuant to the RMPL routing strategy would enable the Exchange to equitably allocate its costs among all Members. Further, the Exchange believe that the expansion of the RMPT Tier to allow the Member’s ADV to also include shares that use the RMPL routing strategy is also reasonable and equitable because of the similar operation of the RMPL and RMPT routing strategies and results in the equal treatment of those orders under the Exchange’s tiered pricing structure. In addition, the inclusion of the RMPL routing strategy in the RMPT Tier should also attract additional midpoint liquidity to the Exchange, resulting in increased price improvement opportunities for orders seeking an execution at the midpoint of the NBBO on the Exchange or elsewhere. 17 15 U.S.C. 78f(b)(4). example, Nasdaq, NYSE, NYSE Arca, BZX, and EDGX charge a fee of $0.0030 per share for orders that remove midpoint liquidity. See Nasdaq’s fee schedule available at https:// www.nasdaqtrader.com/ Trader.aspx?id=PriceListTrading2; NYSE’s price list available at https://www.nyse.com/publicdocs/ nyse/markets/nyse/NYSE_Price_List.pdf; NYSE Arca’s price list available at https://www.nyse.com/ publicdocs/nyse/markets/nyse-arca/NYSE_Arca_ Marketplace_Fees.pdf; BZX’s fee schedule available at https://www.bats.com/us/equities/membership/ fee_schedule/bzx/; and EDGX’s fee schedule available at https://www.bats.com/us/equities/ membership/fee_schedule/edgx/. 18 For PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 The Exchange notes that routing through Bats Trading is voluntary. Members seeking to [sic] midpoint eligible route such orders to BZX, EDGX, NYSE, NYSE Arca, and Nasdaq, or to any other destination covered by the RMPL routing strategy may connect to those destinations directly and be charged the fee or provided the rebate from that destination. The Exchange further believes that this pricing structure is non-discriminatory as it applies equally to all Members. Fee Codes MM and MT The Exchange believes [sic] proposed rule change represents an equitable allocation of reasonable dues, fees, and other charges because the amended the descriptions of fee code MM and MT to [sic] solely intended to align with the description of similar fee codes of its affiliated exchanges. Harmonized descriptions should help alleviate potential investor confusion for those that send midpoint eligible order to the exchange and its affiliates. The proposed changes do not alter the types of orders to which the fee codes would apply. Nor does the Exchange propose to modify the fees associated with MM and MT. In addition, the Exchange also believes that the proposed modifications of the descriptions of fee codes MM and MT are non-discriminatory because they would apply uniformly to all Members. B. Self-Regulatory Organization’s Statement on Burden on Competition This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that this change represents a significant departure from previous pricing offered by the Exchange or from pricing offered by the Exchange’s competitors. The proposed rates would apply uniformly to all Members, and Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal to [sic] fees would increase intermarket competition by offering customers an alternative means to route to destinations covered by fee codes PL, PA, PT and PX. As stated above, routing through Bats Trading is voluntary and Members may utilize other avenues to route orders to destinations covered by fee codes PL, PA, PT and PX, such as connecting to those destinations directly. The changes E:\FR\FM\19APN1.SGM 19APN1 Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices to the RMPT Tier to include the RMPL routing strategy as part of the tier’s ADV calculation should increase competition as it is designed to attract additional midpoint order flow to the Exchange. The changes to the descriptions of fee codes MM and MT should have no impact on competition as they are similar designed to align their descriptions with that of similar fee codes offered by the Exchange’s affiliates. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any 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 19 and paragraph (f) of Rule 19b–4 thereunder.20 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 jstallworth on DSK7TPTVN1PROD with NOTICES Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: • Send an email to rule-comments@ sec.gov. Please include File No. SRBatsEDGA–2017–06 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 No. SR-BatsEDGA–2017–06. 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 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 No. SR–BatsEDGA– 2017–06, and should be submitted on or before May 10, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Brent J. Fields, Secretary. [FR Doc. 2017–07869 Filed 4–18–17; 8:45 am] BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or 19 15 20 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). VerDate Sep<11>2014 15:06 Apr 18, 2017 21 17 Jkt 241001 PO 00000 CFR 200.30–3(a)(12). Frm 00104 Fmt 4703 Sfmt 4703 18519 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80455; File No. 4–631] Joint Industry Plan; Order Approving the Thirteenth Amendment to the National Market System Plan To Address Extraordinary Market Volatility by Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., Investors Exchange LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. April 13, 2017. I. Introduction On February 13, 2017, NYSE Group, Inc., on behalf of the other parties 1 to the National Market System Plan to Address Extraordinary Market Volatility (the ‘‘Plan’’), filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 11A of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 608 thereunder,3 a proposal to amend the Plan.4 The proposal represents the thirteenth amendment to the Plan, and reflects proposed changes unanimously approved by the Participants (‘‘Thirteenth Amendment’’). The proposed Thirteenth Amendment was published for comment in the Federal Register on March 16, 2017.5 The Commission received no comment letters regarding the amendment. This order approves the Thirteenth Amendment to the Plan as proposed. II. Description of the Proposal In the Thirteenth Amendment, the Participants propose to (1) extend the pilot period of the Plan from April 21, 2017 to April 16, 2018; (2) require the Processor to publish, in connection with a reopening after a Trading Pause, the auction reference price, auction collars, 1 Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., Chicago Stock Exchange, Inc., the Financial Industry Regulatory Authority, Inc., Investors Exchange LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC (‘‘NYSE’’), NYSE Arca, Inc., NYSE MKT LLC, and NYSE National Inc. (collectively, the ‘‘Participants’’). 2 15 U.S.C. 78k–1. 3 17 CFR 242.608. 4 See Letter from Elizabeth King, General Counsel, NYSE, to Brent J. Fields, Secretary, Commission, dated February 10, 2017 (‘‘Transmittal Letter’’). 5 See Securities Exchange Act Release No. 80203 (March 10, 2017), 82 FR 14068. E:\FR\FM\19APN1.SGM 19APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 74 (Wednesday, April 19, 2017)]
[Notices]
[Pages 18516-18519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07869]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80448; File No. SR-BatsEDGA-2017-06]

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

April 13, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 31, 2017, Bats EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared

[[Page 18517]]

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 EDGA Rules
15.1(a) and (c).
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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.bats.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend its fee schedule for its equity
platform (``EDGA Equities'') to: (i) Adopt fee code PL, modify fee
codes PA, PT, and PX, as well as the RMPT Tier under footnote 3 to
provide fees for the recently implemented RMPL routing strategy; and
(ii) modify the descriptions of fee codes MM and MT.
Fees for RMPL Routing Strategy
The Exchange recently implemented a new midpoint routing strategy
known as RMPL \6\ under which a MidPoint Peg Order \7\ first checks the
System \8\ for available shares and routes any remaining shares to
destinations on the System routing table \9\ that support midpoint
eligible orders. If any shares remain unexecuted after routing, they
are posted on the EDGA Book \10\ as MidPoint Peg Orders, unless
otherwise instructed by the User.\11\ As a result of this additional
functionality, the Exchange proposes to amend its fee schedule to adopt
fees which would apply to orders routed pursuant to the RMPL routing
strategy.
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\6\ See Securities Exchange Act Release No. 79596 (December 19,
2016), 81 FR 94454 (December 26, 2016) (SR-BatsEDGA-2016-34) (``RMPL
Filing'').
\7\ In sum, a MidPoint Peg Order is a non-displayed Market Order
or Limit Order with an instruction to execute at the midpoint of the
NBBO, or, alternatively, pegged to the less aggressive of the
midpoint of the NBBO or one minimum price variation inside the same
side of the NBBO as the order. See Exchange Rule 11.8(d).
\8\ The term ``System'' is defined as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.'' See Exchange Rule
1.5(cc).
\9\ The term ``System routing table'' refers to the proprietary
process for determining the specific trading venues to which the
System routes orders and the order in which it routes them. See
Exchange Rule 11.11(g). While the process for determining the
specific trading venues to which orders are routed is proprietary,
the Exchange publicly discloses the trading venues associated with
each routing strategy via its Web site at https://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf.
\10\ The term ``EDGA Book'' is defined as the ``System's
electronic file of orders.'' See Exchange Rule 1.5(d). The Exchange
also proposed to capitalize the word ``Book'' within Rule
11.11(g)(13) as the term EDGA Book is a defined term in the
Exchange's Rules.
\11\ The term ``User'' is defined as ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
---------------------------------------------------------------------------

Fee Code PL. The Exchange proposes to adopt fee code PL, which
would apply to orders routed to Bats BZX Exchange, Inc. (``BZX''), Bats
EDGX Exchange, Inc. (``EDGX''), the New York Stock Exchange, Inc.
(``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), or Nasdaq Stock Market LLC
(``Nasdaq'') using a RMPL routing strategy. Orders that yield fee code
PL would be charged a fee of $0.0030 per share in securities priced at
or above $1.00 and 0.30% of the trade's total dollar value in
securities priced below $1.00.
Fee Codes PA, PT, PX, and RMPT Tier. The RMPT routing strategy
operates similarly to RMPL in that under both Mid-Point Peg Orders
check the System for available shares and any remaining shares are then
sent to destinations on the System routing table that support midpoint
eligible orders. If any shares remain unexecuted after routing, they
are posted on the EDGA Book as a Mid-Point Peg Order, unless otherwise
instructed by the User. While RMPL and RMPT operate in an identical
manner, the trading venues that each routing strategy routes to and the
order in which it routes them differ. Due to the identical behavior of
RMPT and RMPL routing options, the Exchange proposes to amend fee Codes
PA, PT, PX, and RMPT Tier, all of which set forth fees for the RMPT
routing strategy, to also provide fees for the RMPL routing strategy.
Each of these changes are as follows:
Fee Code PA. Currently, fee code PA only applies to orders
which add liquidity to the Exchange using a RMPT routing strategy.
Orders that yield fee code PA are assessed a fee of $0.0008 per share
in securities priced at or above $1.00 and are not assessed a fee in
securities below $1.00. The Exchange now proposes modify the
application of fee code PA not only apply to RMPT, but to also apply
RMPL. The Exchange does not propose to modify the fee associated with
PA.
Fee Code PT. Currently, fee code PT only applies to orders
which remove liquidity on the Exchange using a RMPT routing strategy.
Orders that yield fee code PT are assessed a fee of $0.0010 per share
in securities priced at or above $1.00 and are not assessed a fee in
securities below $1.00. The Exchange now proposes modify the
application of fee code PT not only apply to RMPT, but to also apply
RMPL. The Exchange does not propose to modify the fee associated with
PT.
Fee Code PX. Currently, fee code PX only applies to orders
routed using a RMPT routing strategy. Order that yield fee code PX are
assessed a fee of $0.0012 per share in securities priced at or above
$1.00 and 0.30% of the trade's total dollar value in securities priced
below $1.00. The Exchange now proposes modify the application of fee
code PX not only apply to RMPT, but to also apply RMPL. However, fee
code PX would only apply to orders routed to destinations not covered
by fee code PL using the RMPL routing strategy, as set forth above. The
Exchange does not propose to modify the fee associated with PX.
RMPT Tier Under Footnote 3. Currently, the Exchange offers
one RMPT Tier under which a Member may receive a discounted fee of
$0.0008 per share for orders yielding fee codes PT or PX where that
Member adds or removes

[[Page 18518]]

an ADV \12\ greater than or equal to 2,000,000 shares using a the RMPT
routing strategy. The Exchange now proposes to amend the RMPT Tier to
allow the Member's ADV to also include shares that use the RMPL routing
strategy. The Exchange does not propose to modify the fee associated
with PT.
---------------------------------------------------------------------------

\12\ ADV is generally defined as average daily volume calculated
as the number of shares added to, removed from, or routed by, the
Exchange, or any combination or subset thereof, per day. See the
Exchange's fee schedule available at https://www.bats.com/us/equities/membership/fee_schedule/edga/.
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Fee Codes MM and MT
The Exchange proposes to amend the descriptions of fee code MM and
MT to align with the description of similar fee codes of its affiliated
exchanges.\13\ Fee code MM is [sic] applies to Non-Displayed \14\
orders that add liquidity at the midpoint of the national best bid and
offer (``NBBO'') while fee code MT is [sic] applies to Non-Displayed
orders that remove liquidity at the midpoint of the NBBO. Orders that
yield fee code MM or MT are charged a fee of $0.00080 per share in
securities priced at or above $1.00 and 0.08% of the trade's total
dollar value in securities priced below $1.00. To align the description
of fee codes MM and MT with similar fee codes of its affiliated
exchanges,\15\ the Exchange proposes to amend their descriptions as
follows. Fee code MM would now state that is applies to Non-displayed
orders that add liquidity using Mid-Point Peg order type. Fee code MT
would now state that is applies to Non-displayed orders that remove
liquidity using Mid-Point Peg order type. The proposed changes do not
alter the types of orders to which the fee codes would apply. The
Exchange does not propose to modify the fee associated with MM and MT.
---------------------------------------------------------------------------

\13\ The Exchange's affiliates are Bats EDGX Exchange, Inc.
(``EDGX''), Bats BYX Exchange, Inc., (``BYX''), and Bats BZX
Exchange, Inc. (``BZX'').
\14\ See Exchange Rule 11.6(e)(2).
\15\ See e.g., fee codes MM and MT on the BYX fee schedule
available at https://www.bats.com/us/equities/membership/fee_schedule/byx/; and fee code MM on the EDGX fee schedule
available at https://www.bats.com/us/equities/membership/fee_schedule/edgx/.
---------------------------------------------------------------------------

Implementation Date
The Exchange proposes to implement the above changes to its fee
schedule on April 3, 2017.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\16\ in general, and
furthers the objectives of Section 6(b)(4),\17\ 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.
---------------------------------------------------------------------------

\16\ 15 U.S.C. 78f.
\17\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Fees for RMPL Routing Strategy
The Exchange believes the proposed fee code PL and the expansion of
fee codes PA, PT and PX as well as the RMPT Tier to adopt fees for
orders routed using the options RMPL routing strategy represents an
equitable allocation of reasonable dues, fees. The proposed fee code
structure would enable the Exchange to charge a rate reasonably related
to the rate that Bats Trading, Inc. (``Bats Trading''), the Exchange's
affiliated routing broker-dealer, would be charged for routing orders
to destinations described in fee codes PL, PA, PT and PX when it does
not qualify for a volume tier reduced fee. As a result, when Bats
Trading is charged a fee when it routes an order which removes
liquidity from a destination described in fee codes PL, PA, PT and
PX.\18\ Bats Trading will pass through these rates to the Exchange and
the Exchange, in turn, will charge the rates under fee codes PL, PA, PT
and PX, as applicable. The proposed fee under fee codes PL, PA, PT and
PX for orders routed pursuant to the RMPL routing strategy would enable
the Exchange to equitably allocate its costs among all Members.
Further, the Exchange believe that the expansion of the RMPT Tier to
allow the Member's ADV to also include shares that use the RMPL routing
strategy is also reasonable and equitable because of the similar
operation of the RMPL and RMPT routing strategies and results in the
equal treatment of those orders under the Exchange's tiered pricing
structure. In addition, the inclusion of the RMPL routing strategy in
the RMPT Tier should also attract additional midpoint liquidity to the
Exchange, resulting in increased price improvement opportunities for
orders seeking an execution at the midpoint of the NBBO on the Exchange
or elsewhere.
---------------------------------------------------------------------------

\18\ For example, Nasdaq, NYSE, NYSE Arca, BZX, and EDGX charge
a fee of $0.0030 per share for orders that remove midpoint
liquidity. See Nasdaq's fee schedule available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2; NYSE's price
list available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; NYSE Arca's price list available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; BZX's fee schedule available at
https://www.bats.com/us/equities/membership/fee_schedule/bzx/; and
EDGX's fee schedule available at https://www.bats.com/us/equities/membership/fee_schedule/edgx/.
---------------------------------------------------------------------------

The Exchange notes that routing through Bats Trading is voluntary.
Members seeking to [sic] midpoint eligible route such orders to BZX,
EDGX, NYSE, NYSE Arca, and Nasdaq, or to any other destination covered
by the RMPL routing strategy may connect to those destinations directly
and be charged the fee or provided the rebate from that destination.
The Exchange further believes that this pricing structure is non-
discriminatory as it applies equally to all Members.
Fee Codes MM and MT
The Exchange believes [sic] proposed rule change represents an
equitable allocation of reasonable dues, fees, and other charges
because the amended the descriptions of fee code MM and MT to [sic]
solely intended to align with the description of similar fee codes of
its affiliated exchanges. Harmonized descriptions should help alleviate
potential investor confusion for those that send midpoint eligible
order to the exchange and its affiliates. The proposed changes do not
alter the types of orders to which the fee codes would apply. Nor does
the Exchange propose to modify the fees associated with MM and MT. In
addition, the Exchange also believes that the proposed modifications of
the descriptions of fee codes MM and MT are non-discriminatory because
they would apply uniformly to all Members.

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

This proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The Exchange does not believe that this change represents a
significant departure from previous pricing offered by the Exchange or
from pricing offered by the Exchange's competitors. The proposed rates
would apply uniformly to all Members, and Members may opt to disfavor
the Exchange's pricing if they believe that alternatives offer them
better value. Accordingly, the Exchange does not believe that the
proposed changes will impair the ability of Members or competing venues
to maintain their competitive standing in the financial markets. The
Exchange believes that its proposal to [sic] fees would increase
intermarket competition by offering customers an alternative means to
route to destinations covered by fee codes PL, PA, PT and PX. As stated
above, routing through Bats Trading is voluntary and Members may
utilize other avenues to route orders to destinations covered by fee
codes PL, PA, PT and PX, such as connecting to those destinations
directly. The changes

[[Page 18519]]

to the RMPT Tier to include the RMPL routing strategy as part of the
tier's ADV calculation should increase competition as it is designed to
attract additional midpoint order flow to the Exchange. The changes to
the descriptions of fee codes MM and MT should have no impact on
competition as they are similar designed to align their descriptions
with that of similar fee codes offered by the Exchange's affiliates.
Additionally, Members may opt to disfavor the Exchange's pricing if
they believe that alternatives offer them better value. Accordingly,
the Exchange does not believe that the proposed changes will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets. The Exchange believes that its
proposal would not burden intramarket competition because the proposed
rate would apply uniformly to all Members.

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

The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any 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 \19\ and paragraph (f) of Rule 19b-4
thereunder.\20\ 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.
---------------------------------------------------------------------------

\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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 No. SR-BatsEDGA-2017-06 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 No. SR-BatsEDGA-2017-06. 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 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 No. SR-BatsEDGA-2017-06, and should be
submitted on or before May 10, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2017-07869 Filed 4-18-17; 8:45 am]
BILLING CODE 8011-01-P

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