Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Related to Fees for Use of BATS Exchange, Inc., 28669-28671 [2013-11518]

Download as PDF Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices TKELLEY on DSK3SPTVN1PROD with NOTICES and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 7 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers because the proposed rule change will require all TPHs to create and maintain a BCP regardless of the kind of business they perform on the Exchange. In particular, the proposed rule change will help ensure that TPHs are prepared in the event of a significant business disruption. This will seek to stabilize the market in the event a TPH, or multiple TPHs at the same time, face(s) a situation where their participation in the market place might be compromised. In addition, other exchanges [sic] have similar rules 8 requiring procedures in place for these situations, and, thus, the Exchange believes harmonizing these requirements would protect the marketplace as a whole. The Exchange also believes the proposed rule change is consistent with Section 6(b)(1) of the Act,9 which provides that the Exchange be organized and have the capacity to be able to carry out the purposes of the Act and to enforce compliance by the Exchange’s Trading Permit Holders and persons associated with its Trading Permit Holders with the Act, the rules and regulations thereunder, and the rules of the Exchange. Specifically, the Exchange believes that requiring TPHs to have a BCP helps to ensure TPHs have the ability to continue to comply with the Act and Exchange rules in instances of an emergency or other disruption. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange does not believe requiring TPHs to create and maintain a BCP will burden competition as it will not change any activity on the Exchange. Instead, the proposed rule change will require TPHs to have a plan to function as they normally do in the event of an 7 Id. 8 See Financial Industry Regulatory Authority Rule (‘‘FINRA’’) Rule 4370. 9 15 U.S.C. 78f(b)(1). VerDate Mar<15>2010 17:16 May 14, 2013 Jkt 229001 emergency or other severe business disruption. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange neither solicited nor received comments on the proposed rule change. 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 Exchange 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. 28669 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 20549–1090, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CBOE– 2013–045, and should be submitted on or before June 5, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. 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: [FR Doc. 2013–11452 Filed 5–14–13; 8:45 am] Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml ); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2013–045 on the subject line. Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Related to Fees for Use of BATS Exchange, Inc. 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–CBOE–2013–045. 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 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69546; File No. SR–BATS– 2013–025] May 9, 2013. 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 May 1, 2013, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 1 15 E:\FR\FM\15MYN1.SGM 15MYN1 28670 Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices 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 BATS Rules 15.1(a) and (c). Changes to the fee schedule pursuant to this proposal are effective upon filing. The text of the proposed rule change is available at the Exchange’s Web site at 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 Statutory Basis for, the Proposed Rule Change 1. Purpose TKELLEY on DSK3SPTVN1PROD with NOTICES The purpose of the proposed rule change is to modify the ‘‘Options Pricing’’ section of its fee schedule effective immediately, in order to (i) increase fees for any logical port with bulk-quoting capabilities; and (ii) to eliminate the waiver of fees for logical ports with bulk-quoting capabilities for Members achieving certain Quoting Incentive Program (‘‘QIP’’) thresholds. The Exchange offers a bulk-quoting interface which allows Users 6 of BATS Options to submit and update multiple bids and offers in one message through logical ports enabled for bulk-quoting.7 5 A Member is any registered broker or dealer that has been admitted to membership in the Exchange. 6 A User on BATS Options is either a member of BATS Options or a sponsored participant who is authorized to obtain access to the Exchange’s system pursuant to BATS Rule 11.3. 7 See Securities Exchange Act Release Nos. 65133 (August 15, 2011), 76 FR 52032 (August 19, 2011) (SR–BATS–2011–029) and 65307 (September 9, 2011), 76 FR 57092 (September 15, 2011) (SR– BATS–2011–034). VerDate Mar<15>2010 17:16 May 14, 2013 Jkt 229001 A logical port represents a port established by the Exchange within the Exchange’s system for trading and billing purposes. Each logical port established is specific to a Member or non-member and grants that Member or non-member the ability to operate a specific application, such as FIX order entry or PITCH data receipt. The bulkquoting application for BATS Options is a particularly useful feature for Users that provide quotations in many different options. Currently, the Exchange charges a fee of $1,000.00 per month per logical port with such bulk-quoting capabilities, which it began charging in October 2011.8 The Exchange is proposing to increase the fee to $1,500.00 per month per logical port with bulk-quoting capabilities. Over time, the costs associated with maintaining the infrastructure of such ports has increased and the Exchange has recently incurred additional expenses in connection with improving the performance and capacity of bulkquoting ports. Accordingly, the Exchange believes that the proposed increase in port fees will help the Exchange to continue to maintain and improve its infrastructure. Additionally, the Exchange is proposing to eliminate the waiver of fees for logical ports with bulk-quoting capabilities for Members achieving QIP. The QIP is a program designed to enhance market quality by incentivizing Market Makers 9 to participate on BATS Options by providing supplemental rebates for executed orders that add liquidity where the Market Maker has an average daily trading volume (‘‘ADV’’) of at least 0.25% of the total consolidated volume reported to the consolidated transaction reporting plan. Currently, the Exchange does not charge Members that participate in the QIP in more than 25 underlying securities for logical ports with bulk-quoting capabilities. The Exchange originally offered these free logical ports with bulk-quoting capability in order to encourage participation in the QIP and to increase the usage of bulk-quoting ports.10 8 See Securities Exchange Act Release No. 65407 (September 27, 2011), 76 FR 61127 (October 3, 2011) (SR–BATS–2011–037). 9 As defined in Rule 16.1(a)(37), a ‘‘Market Maker’’ on BATS Options is a member of BATS Options registered with the Exchange for the purpose of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter XXII of the Exchange’s Rules. 10 See Securities Exchange Act Release No. 66120 (January 9, 2012), 77 FR 2108 (January 13, 2012) (SR–BATS–2011–053). PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 The Exchange proposes to eliminate this waiver and to charge all Members equally for logical ports with bulkquoting capabilities and to eliminate the exception for Members achieving the above described QIP thresholds. As mentioned above, as logical ports with bulk-capacity capabilities have become more widely adopted, the Exchange’s infrastructure costs associated with offering and continuing to offer bulkquoting capabilities have increased. Additionally, the Exchange believes that providing ports free of charge has not encouraged Members to reserve and maintain ports efficiently, but rather, has led to a significant number of ports that are reserved and enabled by such market participants, but are under-used. Accordingly, the Exchange believes that the imposition of port fees for Market Makers participating in the QIP will help the Exchange to continue to maintain and improve its infrastructure, while also encouraging Exchange customers to request and enable only the ports that are necessary for their operations related to the Exchange. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.11 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,12 in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. The Exchange operates in a highly competitive market in which exchanges offer connectivity services as a means to facilitate the trading activities of members and other participants. Accordingly, fees charged for connectivity are constrained by the active competition for the order flow of such participants as well as demand for market data from the Exchange. If a particular exchange charges excessive fees for connectivity, affected members will opt to terminate their connectivity arrangements with that exchange, and adopt a possible range of alternative strategies, including routing to the applicable exchange through another participant or market center or taking that exchange’s data indirectly. Accordingly, the exchange charging 11 15 12 15 E:\FR\FM\15MYN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4). 15MYN1 Federal Register / Vol. 78, No. 94 / Wednesday, May 15, 2013 / Notices TKELLEY on DSK3SPTVN1PROD with NOTICES excessive fees would stand to lose not only connectivity revenues but also revenues associated with the execution of orders routed to it by affected members, and, to the extent applicable, market data revenues. The Exchange believes that this competitive dynamic imposes powerful restraints on the ability of any exchange to charge unreasonable fees for connectivity. The Exchange believes that the proposal to increase fees for logical ports with bulk-quoting capability is equitably allocated, reasonable, and not unfairly discriminatory in that the proposal will help the Exchange to cover increasing infrastructure costs associated with offering and continuing to offer bulk-quoting capabilities to BATS Options Users. The Exchange notes that the use of such ports is optional and that market participants can continue to access BATS Options through other logical ports for $400.00 per month. At the same time, the Exchange believes that its fees for bulkquoting ports are reasonable, given the benefits and added efficiencies Users of BATS Options realize through such ports. In addition, the Exchange believes that its fees are equitably allocated among its constituents and not unfairly discriminatory, as, upon eliminating the bulk port fee exemption for Market Makers meeting QIP threshold requirements, they are uniform in application to all Users of BATS Options. For the same reasons discussed above, elimination of the bulk port fee waiver for Market Makers meeting QIP threshold requirements is reasonable, equitably allocated, and not unfairly discriminatory. In addition, elimination of the bulk port fee waiver is reasonable, equitably allocated, and not unfairly discriminatory because it will encourage those Members that were previously exempted from paying bulk port fees to reserve and maintain ports in a more efficient manner. This will allow the Exchange to continue to maintain and improve its infrastructure for all Exchange customers, while also encouraging Market Makers to request and enable only the ports that are necessary for their operations related to the Exchange. (B) Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. As discussed above, the Exchange believes that fees for connectivity are constrained by the robust competition for order flow among VerDate Mar<15>2010 17:16 May 14, 2013 Jkt 229001 exchanges and non-exchange markets. Further, excessive fees for connectivity, including logical port fees, would serve to impair an exchange’s ability to compete for order flow rather than burdening 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 rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and paragraph (f)(2) of Rule 19b–4 thereunder.14 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 proposal is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File No. SR–BATS–2013–025 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 No. SR–BATS–2013–025. 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 changes between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–BATS– 2013–025 and should be submitted on or before June 5, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–11518 Filed 5–14–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69538; File No. SR–CHX– 2013–10] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Consolidate All CHX Order Types, Modifiers, and Related Terms Under One Rule and to Clarify the Basic Requirements of All Orders Sent to the Matching System May 8, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 6, 2013, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The CHX has filed this 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(2). PO 00000 Frm 00096 Fmt 4703 1 15 Sfmt 4703 28671 E:\FR\FM\15MYN1.SGM 15MYN1

Agencies

[Federal Register Volume 78, Number 94 (Wednesday, May 15, 2013)]
[Notices]
[Pages 28669-28671]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11518]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69546; File No. SR-BATS-2013-025]


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

May 9, 2013.
    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 May 1, 2013, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Exchange has designated 
the proposed rule change as one establishing or changing a member due, 
fee, or other charge imposed by the Exchange under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposed rule change effective upon filing with the 
Commission. The

[[Page 28670]]

Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to BATS Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
---------------------------------------------------------------------------

    \5\ 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to modify the ``Options 
Pricing'' section of its fee schedule effective immediately, in order 
to (i) increase fees for any logical port with bulk-quoting 
capabilities; and (ii) to eliminate the waiver of fees for logical 
ports with bulk-quoting capabilities for Members achieving certain 
Quoting Incentive Program (``QIP'') thresholds.
    The Exchange offers a bulk-quoting interface which allows Users \6\ 
of BATS Options to submit and update multiple bids and offers in one 
message through logical ports enabled for bulk-quoting.\7\ A logical 
port represents a port established by the Exchange within the 
Exchange's system for trading and billing purposes. Each logical port 
established is specific to a Member or non-member and grants that 
Member or non-member the ability to operate a specific application, 
such as FIX order entry or PITCH data receipt. The bulk-quoting 
application for BATS Options is a particularly useful feature for Users 
that provide quotations in many different options.
---------------------------------------------------------------------------

    \6\ A User on BATS Options is either a member of BATS Options or 
a sponsored participant who is authorized to obtain access to the 
Exchange's system pursuant to BATS Rule 11.3.
    \7\ See Securities Exchange Act Release Nos. 65133 (August 15, 
2011), 76 FR 52032 (August 19, 2011) (SR-BATS-2011-029) and 65307 
(September 9, 2011), 76 FR 57092 (September 15, 2011) (SR-BATS-2011-
034).
---------------------------------------------------------------------------

    Currently, the Exchange charges a fee of $1,000.00 per month per 
logical port with such bulk-quoting capabilities, which it began 
charging in October 2011.\8\ The Exchange is proposing to increase the 
fee to $1,500.00 per month per logical port with bulk-quoting 
capabilities. Over time, the costs associated with maintaining the 
infrastructure of such ports has increased and the Exchange has 
recently incurred additional expenses in connection with improving the 
performance and capacity of bulk-quoting ports. Accordingly, the 
Exchange believes that the proposed increase in port fees will help the 
Exchange to continue to maintain and improve its infrastructure.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 65407 (September 27, 
2011), 76 FR 61127 (October 3, 2011) (SR-BATS-2011-037).
---------------------------------------------------------------------------

    Additionally, the Exchange is proposing to eliminate the waiver of 
fees for logical ports with bulk-quoting capabilities for Members 
achieving QIP. The QIP is a program designed to enhance market quality 
by incentivizing Market Makers \9\ to participate on BATS Options by 
providing supplemental rebates for executed orders that add liquidity 
where the Market Maker has an average daily trading volume (``ADV'') of 
at least 0.25% of the total consolidated volume reported to the 
consolidated transaction reporting plan. Currently, the Exchange does 
not charge Members that participate in the QIP in more than 25 
underlying securities for logical ports with bulk-quoting capabilities. 
The Exchange originally offered these free logical ports with bulk-
quoting capability in order to encourage participation in the QIP and 
to increase the usage of bulk-quoting ports.\10\
---------------------------------------------------------------------------

    \9\ As defined in Rule 16.1(a)(37), a ``Market Maker'' on BATS 
Options is a member of BATS Options registered with the Exchange for 
the purpose of making markets in options contracts traded on the 
Exchange and that is vested with the rights and responsibilities 
specified in Chapter XXII of the Exchange's Rules.
    \10\ See Securities Exchange Act Release No. 66120 (January 9, 
2012), 77 FR 2108 (January 13, 2012) (SR-BATS-2011-053).
---------------------------------------------------------------------------

    The Exchange proposes to eliminate this waiver and to charge all 
Members equally for logical ports with bulk-quoting capabilities and to 
eliminate the exception for Members achieving the above described QIP 
thresholds. As mentioned above, as logical ports with bulk-capacity 
capabilities have become more widely adopted, the Exchange's 
infrastructure costs associated with offering and continuing to offer 
bulk-quoting capabilities have increased. Additionally, the Exchange 
believes that providing ports free of charge has not encouraged Members 
to reserve and maintain ports efficiently, but rather, has led to a 
significant number of ports that are reserved and enabled by such 
market participants, but are under-used. Accordingly, the Exchange 
believes that the imposition of port fees for Market Makers 
participating in the QIP will help the Exchange to continue to maintain 
and improve its infrastructure, while also encouraging Exchange 
customers to request and enable only the ports that are necessary for 
their operations related to the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\11\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\12\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and other persons using any facility or system which the 
Exchange operates or controls.
---------------------------------------------------------------------------

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

    The Exchange operates in a highly competitive market in which 
exchanges offer connectivity services as a means to facilitate the 
trading activities of members and other participants. Accordingly, fees 
charged for connectivity are constrained by the active competition for 
the order flow of such participants as well as demand for market data 
from the Exchange. If a particular exchange charges excessive fees for 
connectivity, affected members will opt to terminate their connectivity 
arrangements with that exchange, and adopt a possible range of 
alternative strategies, including routing to the applicable exchange 
through another participant or market center or taking that exchange's 
data indirectly. Accordingly, the exchange charging

[[Page 28671]]

excessive fees would stand to lose not only connectivity revenues but 
also revenues associated with the execution of orders routed to it by 
affected members, and, to the extent applicable, market data revenues. 
The Exchange believes that this competitive dynamic imposes powerful 
restraints on the ability of any exchange to charge unreasonable fees 
for connectivity.
    The Exchange believes that the proposal to increase fees for 
logical ports with bulk-quoting capability is equitably allocated, 
reasonable, and not unfairly discriminatory in that the proposal will 
help the Exchange to cover increasing infrastructure costs associated 
with offering and continuing to offer bulk-quoting capabilities to BATS 
Options Users. The Exchange notes that the use of such ports is 
optional and that market participants can continue to access BATS 
Options through other logical ports for $400.00 per month. At the same 
time, the Exchange believes that its fees for bulk-quoting ports are 
reasonable, given the benefits and added efficiencies Users of BATS 
Options realize through such ports. In addition, the Exchange believes 
that its fees are equitably allocated among its constituents and not 
unfairly discriminatory, as, upon eliminating the bulk port fee 
exemption for Market Makers meeting QIP threshold requirements, they 
are uniform in application to all Users of BATS Options.
    For the same reasons discussed above, elimination of the bulk port 
fee waiver for Market Makers meeting QIP threshold requirements is 
reasonable, equitably allocated, and not unfairly discriminatory. In 
addition, elimination of the bulk port fee waiver is reasonable, 
equitably allocated, and not unfairly discriminatory because it will 
encourage those Members that were previously exempted from paying bulk 
port fees to reserve and maintain ports in a more efficient manner. 
This will allow the Exchange to continue to maintain and improve its 
infrastructure for all Exchange customers, while also encouraging 
Market Makers to request and enable only the ports that are necessary 
for their operations related to the Exchange.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. As discussed above, the 
Exchange believes that fees for connectivity are constrained by the 
robust competition for order flow among exchanges and non-exchange 
markets. Further, excessive fees for connectivity, including logical 
port fees, would serve to impair an exchange's ability to compete for 
order flow rather than burdening 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 rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \13\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\14\ 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.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-BATS-2013-025 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 No. SR-BATS-2013-025. 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 changes between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BATS-2013-025 and should be 
submitted on or before June 5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11518 Filed 5-14-13; 8:45 am]
BILLING CODE 8011-01-P
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