Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees for Use of BATS Y-Exchange, Inc., 66180-66183 [2010-27144]

Download as PDF 66180 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Notices and issuers and other persons using any facility or system which The Exchange operates or controls. In particular, the Exchange notes that the use of colocation services is entirely voluntary and made available on a nondiscriminatory basis. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. 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)(ii) of the Act.8 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or 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, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments srobinson on DSKHWCL6B1PROD with NOTICES • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2010–133 on the subject line. All submissions should refer to File Number SR–NASDAQ–2010–133. This file number should be included on the subject line if e-mail 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 a.m. and 3 p.m. Copies of such 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– NASDAQ–2010–133, and should be submitted on or before November 17, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–27194 Filed 10–26–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63149; File No. SR–BYX– 2010–004] Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees for Use of BATS Y-Exchange, Inc. October 21, 2010. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. 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 October CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. U.S.C. 78s(b)(3)(a)(ii). VerDate Mar<15>2010 17:00 Oct 26, 2010 Jkt 223001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify its fee schedule applicable to Members 3 of the Exchange pursuant to BYX Rules 15.1(a) and (c). While changes to the fee schedule pursuant to this proposal will be effective upon filing, the changes will become operative on October 15, 2010. The text of the proposed rule change is available at the Exchange’s Web site at https://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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to implement a fee schedule applicable to use of the Exchange commencing on the date it begins operating as a national securities exchange. The Exchange currently intends to commence operations on October 15, 2010. Please find below a description of the fees and rebates that the Exchange intends to impose under the initial, proposed fee schedule. The Exchange does not propose to charge different fees or grant different rebates depending on the amount of orders submitted to, and/or trades executed on or through, the Exchange. Accordingly, all fees and rebates 9 17 1 15 8 15 14, 2010, BATS Y-Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. PO 00000 Frm 00121 Fmt 4703 3 A Member is any registered broker or dealer that has been admitted to membership in the Exchange. Sfmt 4703 E:\FR\FM\27OCN1.SGM 27OCN1 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Notices described below are applicable to all Members, regardless of the overall volume of their trading activities on the Exchange. Furthermore, the proposed fees are different but structurally similar to those of the Exchange’s affiliated exchange, BATS Exchange, Inc. (‘‘BATS Exchange’’ or ‘‘BATS’’), though the Exchange has omitted fees that are not currently proposed to be charged by the Exchange or that are not pertinent to the Exchange’s planned business. (i) Standard Order Execution Fees— Removing Liquidity The Exchange is proposing to rebate $0.0003 per share for executions that remove liquidity from the Exchange, with the exception of executions involving securities priced under $1.00 per share. With respect to securities priced under $1.00 per share that remove liquidity from the Exchange’s book, the Exchange proposes to charge a fee of 0.10% of the total dollar value of the execution. (ii) Standard Order Execution Fees— Adding Liquidity The Exchange proposes to establish a no charge and no rebate structure for adding displayed liquidity to the BYX order book in securities priced $1.00 and above and for adding any liquidity (displayed or non-displayed) to the BYX order book securities priced below $1.00. The Exchange proposes charging $0.0005 per share that adds nondisplayed liquidity to the BYX order book in securities priced $1.00 and above. As defined on the proposed fee schedule, the reference to ‘‘nondisplayed liquidity’’ for purposes of the fee schedule includes liquidity resulting from all forms of Pegged Orders,4 MidPoint Peg Orders,5 and Non-Displayed Orders,6 but does not include liquidity resulting from Reserve Orders 7 or Discretionary Orders.8 srobinson on DSKHWCL6B1PROD with NOTICES (iii) Standard Routing Pricing—Best Execution Routing The Exchange proposes to charge the routing charges described below. All charges by the Exchange for routing are applicable only in the event that an order is executed. In other words, there is no charge for orders that are routed away from the Exchange but are not filled. The best execution routing fees proposed by this filing are identical to those charged by the Exchange’s affiliated exchange, BATS Exchange (for 4 As defined in BYX Rule 11.9(c)(8). defined in BYX Rule 11.9(c)(9). 6 As defined in BYX Rule 11.9(c)(11). 7 As defined in BYX Rule 11.9(c)(1). 8 As defined in BYX Rule 11.9(c)(10). 5 As VerDate Mar<15>2010 17:00 Oct 26, 2010 Jkt 223001 identical best execution routing strategies). The standard best execution routing strategies offered by the Exchange include Parallel D, Parallel 2D, Parallel T, CYCLE, RECYCLE and DRT. The Exchange proposes to offer the Parallel D, Parallel 2D, CYCLE and RECYCLE routing strategies at a charge of $0.0028 per share for executions that occur at other trading venues as a result of such strategies. The Exchange proposes to offer its Parallel T routing strategy with a charge of $0.0033 per share for executions that occur at other trading venues via Parallel T. With respect to securities priced under $1.00 per share, the Exchange proposes to charge 0.28% of the total dollar value of the execution of an order that is routed away from the Exchange through Parallel D or Parallel 2D. Similarly, and based on the charge of $0.0033 per share for Parallel T routing, the Exchange proposes to charge 0.33% of the total dollar value of the execution for any security priced under $1.00 per share that is routed away from the Exchange through Parallel T. In addition, consistent with the fees charged by BATS Exchange, BYX proposes to offer its DRT routing strategy to Members with a fee of $0.0020 per share executed at a dark liquidity venue. This lower fee is based on the fact that various dark liquidity venues to which the Exchange routes provide the possibility of executions at reduced rates. Finally, as BATS Exchange does on its fee schedule, BYX proposes to note that the current default best execution routing strategy used by the Exchange is to route through DRT to dark liquidity venues and then to other market centers through Parallel D. (iv) Destination Specific Routing Pricing The Exchange proposes to charge a consistent, discounted fee for Destination Specific Orders routed to certain of the largest market centers measured by volume (NYSE, NYSE Arca and NASDAQ) (referred to by the Exchange as ‘‘One Under’’ pricing). The One Under pricing proposed by BYX is identical to One Under pricing offered by BYX’s affiliated exchange, BATS Exchange, and in each instance the execution fee will be $0.0001 less per share for orders routed to such market centers by the Exchange than such market centers currently charge for removing liquidity. Specifically, the Exchange proposes to charge: (a) $0.0020 per share for BYX + NYSE Destination Specific Orders executed at NYSE; (b) $0.0027 per share for BYX + NYSE ARCA Destination Specific Orders executed at NYSE Arca in Tape PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 66181 B securities; and (c) $0.0029 per share for BYX + NASDAQ Destination Specific Orders executed at NASDAQ or BYX + NYSE ARCA Destination Specific Orders executed at NYSE Arca in Tape A or Tape C securities, while such market centers currently charge removal rates, respectively, of: (x) $0.0021 per share; (y) $0.0028 per share; and (z) $0.0030 per share. In conjunction with this proposal, the Exchange proposes to set forth these fees under a separate heading in order to make clear the order types to which ‘‘One Under’’ pricing applies. All other Destination Specific Order fees (i.e., to BATS Exchange or other market centers, as described below) can be found under the heading for ‘‘Other Non-Standard Routing Options.’’ The Exchange also proposes to adopt pricing for a Destination Specific Order 9 routed to and executed by its affiliated exchange, BATS Exchange. The Exchange proposes to refer to this routing as ‘‘B2B’’ routing, and proposes to charge $0.0025 per share for B2B orders routed to and executed by BATS Exchange. This charge is the same charge a Member would incur if it routed an order to BATS Exchange directly. In addition, the Exchange proposes to adopt a charge of $0.0030 per share for Destination Specific Orders sent to and executed by any market center other than the NYSE, NYSE Arca, NASDAQ or BATS Exchange that displays a Protected Quotation 10 (each a ‘‘Protected Market Center’’). Additionally, the Exchange proposes to charge $0.0020 per share for executions that occur at a dark liquidity venue through a BYX + DRT Destination Specific Order. (v) Other Non-Standard Routing Options In addition to non-standard routing options described elsewhere in this filing, the Exchange also proposes to charge certain other fees identical to those charged by its affiliated exchange, BATS Exchange. Specifically, the Exchange proposes to charge $0.0033 per share for Directed ISO’s.11 The Exchange also proposes not to charge for Modified Destination Specific Orders 12 routed to and executed by a dark liquidity venue through its ‘‘Dark Scan’’ routing strategy. (vi) TRIM Routing Pricing The Exchange proposes to adopt pricing for its new TRIM order routing strategy, which strategy is focused on 9 As defined in BATS Rule 11.9(c)(12). defined in BATS Rule 1.5(t). 11 As defined in BYX Rule 11.9(d)(2). 12 As defined in BATS Rule 11.9(c)(13). 10 As E:\FR\FM\27OCN1.SGM 27OCN1 66182 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Notices seeking execution of orders while minimizing execution costs by routing only to certain low cost execution venues on the Exchange’s System routing table. The Exchange proposes to charge Members $0.0025 per share for TRIM orders routed to and executed by its affiliated exchange, BATS Exchange, which is the same rebate to be offered by BATS to market participants that route directly to and execute at BATS. For executions through TRIM routing that occur at a dark liquidity venue (identified by the Exchange as a ‘‘DRT’’ venue) or the NYSE, the Exchange proposes to charge $0.0020 per share. Finally, to the extent an order routed through TRIM executes at a low-priced venue other than BATS, a DRT venue or NYSE, the Exchange proposes neither to charge the Member any fee nor to pay any rebate for such execution. (vii) SLIM Routing Pricing The Exchange proposes to adopt pricing for its new SLIM order routing strategy, which, similar to TRIM, is focused on seeking execution of orders while minimizing execution costs by routing to certain low cost execution venues on the Exchange’s System routing table. The primary distinction between TRIM and SLIM is that SLIM will route first to low cost execution venues but will ultimately route to all venues on the Exchange’s System routing table, whereas TRIM only routes to low cost execution venues. As with TRIM, the Exchange proposes to charge Members $0.0025 per share for SLIM orders routed to and executed by its affiliated exchange, BATS. For executions through SLIM routing that occur at the NYSE, the Exchange proposes to charge $0.0020 per share. Finally, to the extent an order routed through SLIM executes at any other venue, including any DRT venue, the Exchange proposes to charge $0.0026 per share. srobinson on DSKHWCL6B1PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act. Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. VerDate Mar<15>2010 17:00 Oct 26, 2010 Jkt 223001 The various routing fees proposed by this filing, including fees for order execution and routing strategies offered by the Exchange, are intended to attract order flow to BYX by offering competitive and easy to understand rates to Exchange Members. All fees are structured in a manner comparable to corresponding fees of the Exchange’s affiliate, BATS Exchange, and are set at levels equal to or lower than the levels of the comparable BATS Exchange fees. The differences between the fees charged for routing to specific market centers and routing of specific order types described above are due to different cost structures at the various market centers to which orders may be routed and other factors. For instance, lower transaction fees at NYSE allow the Exchange to charge lower routing fees for BATS + NYSE Destination Specific Orders than Destination Specific Orders routed elsewhere (i.e., to NASDAQ and other protected market centers). Similarly, lower transaction fees at dark liquidity venues permit the Exchange to charge lower routing fees for orders routed to such venues. Because the Exchange incurs additional costs and performs additional services in connection with certain routing services, such as the routing of Directed ISOs and Parallel T routing, it proposes to charge a higher routing fee for such orders. Finally, because the Exchange believes that a uniform routing fee for all other orders routed away from the Exchange through its best execution routing strategies provides Members with certainty as to transaction costs, it proposes to charge standard routing fees for such orders, rather than further differentiating routing fees that it charges to Members. The Exchange 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. Also, although routing services offered by the Exchange are available to all Members, Members are not required to use the Exchange’s routing services, but instead, the Exchange’s routing services are completely optional. Members can manage their own routing practices or can utilize a myriad of other routing solutions that are available to market participants. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change imposes any burden on competition. PO 00000 Frm 00123 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 neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has been designated as a fee change pursuant to Section 19(b)(3)(A)(ii) of the Act 13 and Rule 19b–4(f)(2) thereunder,14 because it establishes or changes a due, fee or other charge imposed on members by the Exchange. Accordingly, the proposal is effective upon filing with the Commission. 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 e-mail to rulecomments@sec.gov. Please include File Number SR–BYX–2010–004 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BYX–2010–004. This file number should be included on the subject line if e-mail 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 13 15 14 17 E:\FR\FM\27OCN1.SGM U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 27OCN1 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Notices submission,15 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, on official business days between the hours of 10 a.m. and 3 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–BYX–2010–004 and should be submitted on or before November 17, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–27144 Filed 10–26–10; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63147; File No. SR–BATS– 2010–029] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by BATS Exchange, Inc. To Amend BATS Rule 11.13, Entitled ‘‘Order Execution’’ srobinson on DSKHWCL6B1PROD with NOTICES October 21, 2010. 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 October 13, 2010, BATS Exchange, Inc. (‘‘BATS’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit text of the proposed rule change is available on the Commission’s Web site at https:// www.sec.gov/rules/sro.shtml. 16 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. VerDate Mar<15>2010 17:00 Oct 26, 2010 Jkt 223001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BATS Rule 11.13, entitled ‘‘Order Execution,’’ to add certain new routing strategies and to modify the description of certain existing Exchange routing strategies. 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 BILLING CODE 8011–01–P 15 The comments on the proposed rule change from interested persons. The Exchange proposes to amend Rule 11.13, which describes its order routing processes, to add certain new routing strategies and to modify the existing description of two Exchange routing strategies. Currently, various routing strategies are available through BATS, including the CYCLE routing strategy, variations of the Parallel routing strategy, DRT routing and Destination Specific Routing. The Exchange proposes to offer two new routing strategies, which are described below. • TRIM. TRIM is a routing option under which an order will check the System for available shares if so instructed by the entering User and then will be sent to destinations on the System routing table. • SLIM. SLIM is a routing option under which an order will check the System for available shares, will be routed to BATS Y–Exchange, Inc. (‘‘BYX’’),3 and then will be sent to 3 BYX is a registered national securities exchange and affiliate of the Exchange. See Securities Exchange Act Release No. 34–62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (order approving application of BATS Y–Exchange, Inc. for registration as a national securities exchange). BYX plans to commence operations on October 15, 2010. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 66183 destinations on the System routing table. In addition to the addition of the TRIM and SLIM routing strategies, the Exchange proposes modifying the description of the Parallel T routing strategy to make clear that when checking the Exchange’s System for available shares, it will only check for displayed shares prior to routing away from the Exchange. The Parallel T routing strategy is intended to route only to Protected Quotations and only for displayed size, and thus, the Exchange believes that removal of only displayed size from its own System is most consistent with this strategy. Exchange Rule 11.13(a)(3)(E) includes a definition of DRT routing, which is routing option in which the entering firm instructs the System to route to alternative trading systems included in the System routing table. The definition of DRT currently states that it can be combined with three specified routing strategies offered by the Exchange. The Exchange proposes modifying the description of DRT routing to make clear that it can be combined with all routing strategies, including the new TRIM and SLIM routing strategies, unless otherwise specified. In addition, because some routing strategies offered by the Exchange might include DRT routing at a later stage, the Exchange proposes to remove the word ‘‘first’’ from the definition of the DRT routing strategy. 2. Statutory Basis The rule change proposed in this submission is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.4 Specifically, the proposed change is consistent with Section 6(b)(5) of the Act,5 because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to, and perfect the mechanism of, a free and open market and a national market system. The proposed change to introduce additional routing strategies and to modify certain existing routing strategies will provide market participants with greater flexibility in routing orders consistent with Regulation NMS without developing 4 15 5 15 E:\FR\FM\27OCN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 27OCN1

Agencies

[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Notices]
[Pages 66180-66183]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-27144]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63149; File No. SR-BYX-2010-004]


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

October 21, 2010.
    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 October 14, 2010, BATS Y-Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its fee schedule applicable to 
Members \3\ of the Exchange pursuant to BYX Rules 15.1(a) and (c). 
While changes to the fee schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on October 15, 
2010.
---------------------------------------------------------------------------

    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at https://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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to implement a fee schedule applicable to use 
of the Exchange commencing on the date it begins operating as a 
national securities exchange. The Exchange currently intends to 
commence operations on October 15, 2010. Please find below a 
description of the fees and rebates that the Exchange intends to impose 
under the initial, proposed fee schedule.
    The Exchange does not propose to charge different fees or grant 
different rebates depending on the amount of orders submitted to, and/
or trades executed on or through, the Exchange. Accordingly, all fees 
and rebates

[[Page 66181]]

described below are applicable to all Members, regardless of the 
overall volume of their trading activities on the Exchange. 
Furthermore, the proposed fees are different but structurally similar 
to those of the Exchange's affiliated exchange, BATS Exchange, Inc. 
(``BATS Exchange'' or ``BATS''), though the Exchange has omitted fees 
that are not currently proposed to be charged by the Exchange or that 
are not pertinent to the Exchange's planned business.
(i) Standard Order Execution Fees--Removing Liquidity
    The Exchange is proposing to rebate $0.0003 per share for 
executions that remove liquidity from the Exchange, with the exception 
of executions involving securities priced under $1.00 per share. With 
respect to securities priced under $1.00 per share that remove 
liquidity from the Exchange's book, the Exchange proposes to charge a 
fee of 0.10% of the total dollar value of the execution.
(ii) Standard Order Execution Fees--Adding Liquidity
    The Exchange proposes to establish a no charge and no rebate 
structure for adding displayed liquidity to the BYX order book in 
securities priced $1.00 and above and for adding any liquidity 
(displayed or non-displayed) to the BYX order book securities priced 
below $1.00. The Exchange proposes charging $0.0005 per share that adds 
non-displayed liquidity to the BYX order book in securities priced 
$1.00 and above. As defined on the proposed fee schedule, the reference 
to ``non-displayed liquidity'' for purposes of the fee schedule 
includes liquidity resulting from all forms of Pegged Orders,\4\ Mid-
Point Peg Orders,\5\ and Non-Displayed Orders,\6\ but does not include 
liquidity resulting from Reserve Orders \7\ or Discretionary Orders.\8\
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    \4\ As defined in BYX Rule 11.9(c)(8).
    \5\ As defined in BYX Rule 11.9(c)(9).
    \6\ As defined in BYX Rule 11.9(c)(11).
    \7\ As defined in BYX Rule 11.9(c)(1).
    \8\ As defined in BYX Rule 11.9(c)(10).
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(iii) Standard Routing Pricing--Best Execution Routing
    The Exchange proposes to charge the routing charges described 
below. All charges by the Exchange for routing are applicable only in 
the event that an order is executed. In other words, there is no charge 
for orders that are routed away from the Exchange but are not filled. 
The best execution routing fees proposed by this filing are identical 
to those charged by the Exchange's affiliated exchange, BATS Exchange 
(for identical best execution routing strategies). The standard best 
execution routing strategies offered by the Exchange include Parallel 
D, Parallel 2D, Parallel T, CYCLE, RECYCLE and DRT.
    The Exchange proposes to offer the Parallel D, Parallel 2D, CYCLE 
and RECYCLE routing strategies at a charge of $0.0028 per share for 
executions that occur at other trading venues as a result of such 
strategies. The Exchange proposes to offer its Parallel T routing 
strategy with a charge of $0.0033 per share for executions that occur 
at other trading venues via Parallel T.
    With respect to securities priced under $1.00 per share, the 
Exchange proposes to charge 0.28% of the total dollar value of the 
execution of an order that is routed away from the Exchange through 
Parallel D or Parallel 2D. Similarly, and based on the charge of 
$0.0033 per share for Parallel T routing, the Exchange proposes to 
charge 0.33% of the total dollar value of the execution for any 
security priced under $1.00 per share that is routed away from the 
Exchange through Parallel T.
    In addition, consistent with the fees charged by BATS Exchange, BYX 
proposes to offer its DRT routing strategy to Members with a fee of 
$0.0020 per share executed at a dark liquidity venue. This lower fee is 
based on the fact that various dark liquidity venues to which the 
Exchange routes provide the possibility of executions at reduced rates. 
Finally, as BATS Exchange does on its fee schedule, BYX proposes to 
note that the current default best execution routing strategy used by 
the Exchange is to route through DRT to dark liquidity venues and then 
to other market centers through Parallel D.
(iv) Destination Specific Routing Pricing
    The Exchange proposes to charge a consistent, discounted fee for 
Destination Specific Orders routed to certain of the largest market 
centers measured by volume (NYSE, NYSE Arca and NASDAQ) (referred to by 
the Exchange as ``One Under'' pricing). The One Under pricing proposed 
by BYX is identical to One Under pricing offered by BYX's affiliated 
exchange, BATS Exchange, and in each instance the execution fee will be 
$0.0001 less per share for orders routed to such market centers by the 
Exchange than such market centers currently charge for removing 
liquidity. Specifically, the Exchange proposes to charge: (a) $0.0020 
per share for BYX + NYSE Destination Specific Orders executed at NYSE; 
(b) $0.0027 per share for BYX + NYSE ARCA Destination Specific Orders 
executed at NYSE Arca in Tape B securities; and (c) $0.0029 per share 
for BYX + NASDAQ Destination Specific Orders executed at NASDAQ or BYX 
+ NYSE ARCA Destination Specific Orders executed at NYSE Arca in Tape A 
or Tape C securities, while such market centers currently charge 
removal rates, respectively, of: (x) $0.0021 per share; (y) $0.0028 per 
share; and (z) $0.0030 per share.
    In conjunction with this proposal, the Exchange proposes to set 
forth these fees under a separate heading in order to make clear the 
order types to which ``One Under'' pricing applies. All other 
Destination Specific Order fees (i.e., to BATS Exchange or other market 
centers, as described below) can be found under the heading for ``Other 
Non-Standard Routing Options.''
    The Exchange also proposes to adopt pricing for a Destination 
Specific Order \9\ routed to and executed by its affiliated exchange, 
BATS Exchange. The Exchange proposes to refer to this routing as 
``B2B'' routing, and proposes to charge $0.0025 per share for B2B 
orders routed to and executed by BATS Exchange. This charge is the same 
charge a Member would incur if it routed an order to BATS Exchange 
directly. In addition, the Exchange proposes to adopt a charge of 
$0.0030 per share for Destination Specific Orders sent to and executed 
by any market center other than the NYSE, NYSE Arca, NASDAQ or BATS 
Exchange that displays a Protected Quotation \10\ (each a ``Protected 
Market Center''). Additionally, the Exchange proposes to charge $0.0020 
per share for executions that occur at a dark liquidity venue through a 
BYX + DRT Destination Specific Order.
---------------------------------------------------------------------------

    \9\ As defined in BATS Rule 11.9(c)(12).
    \10\ As defined in BATS Rule 1.5(t).
---------------------------------------------------------------------------

(v) Other Non-Standard Routing Options
    In addition to non-standard routing options described elsewhere in 
this filing, the Exchange also proposes to charge certain other fees 
identical to those charged by its affiliated exchange, BATS Exchange. 
Specifically, the Exchange proposes to charge $0.0033 per share for 
Directed ISO's.\11\ The Exchange also proposes not to charge for 
Modified Destination Specific Orders \12\ routed to and executed by a 
dark liquidity venue through its ``Dark Scan'' routing strategy.
---------------------------------------------------------------------------

    \11\ As defined in BYX Rule 11.9(d)(2).
    \12\ As defined in BATS Rule 11.9(c)(13).
---------------------------------------------------------------------------

(vi) TRIM Routing Pricing
    The Exchange proposes to adopt pricing for its new TRIM order 
routing strategy, which strategy is focused on

[[Page 66182]]

seeking execution of orders while minimizing execution costs by routing 
only to certain low cost execution venues on the Exchange's System 
routing table. The Exchange proposes to charge Members $0.0025 per 
share for TRIM orders routed to and executed by its affiliated 
exchange, BATS Exchange, which is the same rebate to be offered by BATS 
to market participants that route directly to and execute at BATS. For 
executions through TRIM routing that occur at a dark liquidity venue 
(identified by the Exchange as a ``DRT'' venue) or the NYSE, the 
Exchange proposes to charge $0.0020 per share. Finally, to the extent 
an order routed through TRIM executes at a low-priced venue other than 
BATS, a DRT venue or NYSE, the Exchange proposes neither to charge the 
Member any fee nor to pay any rebate for such execution.
(vii) SLIM Routing Pricing
    The Exchange proposes to adopt pricing for its new SLIM order 
routing strategy, which, similar to TRIM, is focused on seeking 
execution of orders while minimizing execution costs by routing to 
certain low cost execution venues on the Exchange's System routing 
table. The primary distinction between TRIM and SLIM is that SLIM will 
route first to low cost execution venues but will ultimately route to 
all venues on the Exchange's System routing table, whereas TRIM only 
routes to low cost execution venues. As with TRIM, the Exchange 
proposes to charge Members $0.0025 per share for SLIM orders routed to 
and executed by its affiliated exchange, BATS. For executions through 
SLIM routing that occur at the NYSE, the Exchange proposes to charge 
$0.0020 per share. Finally, to the extent an order routed through SLIM 
executes at any other venue, including any DRT venue, the Exchange 
proposes to charge $0.0026 per share.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act. 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and other persons using any facility or system which the 
Exchange operates or controls.
    The various routing fees proposed by this filing, including fees 
for order execution and routing strategies offered by the Exchange, are 
intended to attract order flow to BYX by offering competitive and easy 
to understand rates to Exchange Members. All fees are structured in a 
manner comparable to corresponding fees of the Exchange's affiliate, 
BATS Exchange, and are set at levels equal to or lower than the levels 
of the comparable BATS Exchange fees. The differences between the fees 
charged for routing to specific market centers and routing of specific 
order types described above are due to different cost structures at the 
various market centers to which orders may be routed and other factors. 
For instance, lower transaction fees at NYSE allow the Exchange to 
charge lower routing fees for BATS + NYSE Destination Specific Orders 
than Destination Specific Orders routed elsewhere (i.e., to NASDAQ and 
other protected market centers). Similarly, lower transaction fees at 
dark liquidity venues permit the Exchange to charge lower routing fees 
for orders routed to such venues. Because the Exchange incurs 
additional costs and performs additional services in connection with 
certain routing services, such as the routing of Directed ISOs and 
Parallel T routing, it proposes to charge a higher routing fee for such 
orders. Finally, because the Exchange believes that a uniform routing 
fee for all other orders routed away from the Exchange through its best 
execution routing strategies provides Members with certainty as to 
transaction costs, it proposes to charge standard routing fees for such 
orders, rather than further differentiating routing fees that it 
charges to Members.
    The Exchange 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. 
Also, although routing services offered by the Exchange are available 
to all Members, Members are not required to use the Exchange's routing 
services, but instead, the Exchange's routing services are completely 
optional. Members can manage their own routing practices or can utilize 
a myriad of other routing solutions that are available to market 
participants.

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

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \13\ and Rule 
19b-4(f)(2) thereunder,\14\ because it establishes or changes a due, 
fee or other charge imposed on members by the Exchange. Accordingly, 
the proposal is effective upon filing with the Commission.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-BYX-2010-004 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BYX-2010-004. This file 
number should be included on the subject line if e-mail 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

[[Page 66183]]

submission,\15\ 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, on official business days between 
the hours of 10 a.m. and 3 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-BYX-
2010-004 and should be submitted on or before November 17, 2010.
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    \15\ The text of the proposed rule change is available on the 
Commission's Web site at https://www.sec.gov/rules/sro.shtml.
    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27144 Filed 10-26-10; 8:45 am]
BILLING CODE 8011-01-P
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