Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc., 49136-49140 [2014-19578]

Download as PDF 49136 Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 / Notices including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–19581 Filed 8–18–14; 8:45 am] • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml), or • Send an email to rule-comments@ sec.gov. Please include File No. SR– CME–2014–30 on the subject line. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72830; File No. SR–BATS– 2014–030] Paper Comments tkelley on DSK3SPTVN1PROD with NOTICES • 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–CME–2014–30. 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 (http://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 filing also will be available for inspection and copying at the principal office of CME and on CME’s Web site at http://www.cmegroup.com/marketregulation/rule-filings.html. 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–CME–2014–30 and should be submitted on or before September 9, 2014. VerDate Mar<15>2010 16:30 Aug 18, 2014 Jkt 232001 Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. August 13, 2014. 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 August 1, 2014, 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 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 http://www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 9 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). 5 A Member is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 1 15 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 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 modify its fee schedule applicable to use of the Exchange in order to: (i) Add an additional ‘‘Step-Up Tier’’ for purposes of tiered pricing applicable to the Exchange’s equities trading platform (‘‘BATS Equities’’); (ii) introduce an ‘‘Options Step-Up Tier’’ and a corresponding definition of ‘‘Options Step-Up Add TCV’’ for purposes of tiered pricing applicable to the Exchange’s equity options trading platform (‘‘BATS Options’’); (iii) reduce the fee charged by BATS Options to remove liquidity for all Customer 6 orders in securities subject to the options penny pilot program (‘‘Penny Pilot Securities’’); and (iv) increase the fee charged by BATS Options for Professional,7 Firm, and Market Maker 8 orders routed to and executed at certain venues. Additional Step-Up Tier—BATS Equities Currently, with respect to BATS Equities, the Exchange determines the liquidity adding rebate that it will provide to Members using the Exchange’s tiered pricing structure, which is based on the Member meeting certain volume tiers based on their 6 As defined on the Exchange’s fee schedule, a ‘‘Customer’’ order is any transaction identified by a Member for clearing in the Customer range at the Options Clearing Corporation (‘‘OCC’’), except for those designated as ‘‘Professional’’. 7 The term ‘‘Professional’’ is defined in Exchange Rule 16.1 to mean any person or entity that (A) is not a broker or dealer in securities, and (B) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). 8 As defined on the Exchange’s fee schedule, the terms ‘‘Firm’’ and ‘‘Market Maker’’ apply to any transaction identified by a member for clearing in the Firm or Market Maker range, respectively, at the Options Clearing Corporation (‘‘OCC’’). E:\FR\FM\19AUN1.SGM 19AUN1 Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 / Notices tkelley on DSK3SPTVN1PROD with NOTICES ADAV 9 as a percentage of TCV 10 or ADV 11 as a percentage of TCV. Under such pricing structure, a Member will receive an adding rebate of anywhere between $0.0020 and $0.0032 per share executed, depending on the volume tier for which such Member qualifies. The Exchange also maintains two additional types of tiers in addition to the volume tiers described above: Step-Up Tiers and a Cross-Asset Step-Up tier. The Step-Up Tier and Cross-Asset Step-Up tier provide Members with additional ways to qualify for enhanced rebates. As proposed, the existing volume tiers, including the Step-Up Tiers and Cross-Asset Step-Up Tier will remain the same. However, the Exchange proposes to add a new tier to its fee schedule as Step-Up Tier 1, and to renumber the existing tiers as Step-Up Tiers 2 and 3. The new proposed StepUp Tier 1 would provide a rebate of $0.0025 per share where the Member’s Step-Up Add TCV is equal to or greater than 0.07%. For purposes of BATS Equities pricing, the Exchange defines the term ‘‘Step-Up Add TCV’’ within the definition of ADAV as a percentage of TCV in January 2014 subtracted from current ADAV as a percentage of TCV. This definition would remain unchanged. A Member’s Step-Up Add TCV is calculated as the increase in the Member’s current ADAV as a percentage of TCV (‘‘Current ADAV’’) over the Member’s ADAV as a percentage of TCV from January 2014 (‘‘Baseline ADAV’’). By way of example, where a Member’s Baseline ADAV is 0.07%, the Member would qualify for new Step-Up Tier 1 if 9 As provided in the fee schedule, for purposes of BATS Equities pricing, ‘‘ADAV’’ means average daily added volume calculated as the number of shares added per day on a monthly basis; the Exchange excludes from the ADAV calculation routed shares as well as shares added on any day that the Exchange’s system experiences a disruption that lasts for more than 60 minutes during regular trading hours (‘‘Exchange System Disruption’’), on any day with a scheduled early market close and on the last Friday in June (the ‘‘Russell Reconstitution Day’’). 10 As provided in the fee schedule, for purposes of BATS Equities pricing, ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption, on any with a scheduled early market close and the Russell Reconstitution Day. 11 As provided in the fee schedule, for purposes of BATS Equities pricing, ‘‘ADV’’ means average daily volume calculated as the number of shares added or removed, combined, per day on a monthly basis; the Exchange excludes from the ADV calculation routed shares, and shares added on any day that the Exchange’s system experiences an Exchange System Disruption, on any day with a scheduled early market close and on the Russell Reconstitution Day. VerDate Mar<15>2010 16:30 Aug 18, 2014 Jkt 232001 the Member’s Current ADAV is at least 0.14%. The Exchange is not proposing any changes to pricing for BATS Equities other than the addition of the new Step-Up Tier 1 and the renumbering of the existing Step-Up Tiers. The Exchange’s Step-Up Tiers, including the new proposed tier, are designed to incentivize Members to increase their participation on the Exchange in terms of their ADAV compared to their January 2014 ADAV. The Exchange notes that the Step-Up tiers are similar to step-up tiers currently employed by NYSE Arca, Inc. (‘‘Arca’’).12 As is currently the case pursuant to the fee schedule, a Member will receive the higher of the volume rebates, step-up rebates, or cross-asset step-up rebates for which they qualify. Options Step-Up Tier—BATS Options The Exchange also proposes to introduce an ‘‘Options Step-Up Tier’’ and a corresponding definition of ‘‘Options Step-Up Add TCV’’ for purposes of tiered pricing applicable to adding liquidity in Penny Pilot Securities to BATS Options. The Exchange notes that it already maintains an Options Step-Up Tier for purposes of tiered pricing applicable to BATS Equities. The Exchange also notes that the definitions within the Options Pricing portion of the fee schedule of TCV (‘‘Options TCV’’) 13 and ADAV (‘‘Options ADAV’’) 14 are similar to but different than those under the Equities Pricing portion of the fee schedule. The Exchange notes that its proposed definition of Options Step-Up Add TCV for BATS Options pricing mirrors the definition of Options Step-Up Add TCV under BATS Equities pricing with the exception of the applicable baseline, which, for BATS Options is proposed to be June 2014 and for BATS Equities is January 2014. Thus, for purposes of BATS Options pricing, the Exchange 12 See Exchange Act Release No. 64820 (July 12, 2011), 76 FR 40974 (July 6, 2011) (SR–NYSEArca– 2011–41) [sic]. 13 As provided in the fee schedule, for purposes of BATS Options pricing, ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges to the consolidated transaction reporting plan for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. 14 As provided in the fee schedule, for purposes of BATS Options pricing, ‘‘ADAV’’ means average daily volume calculated as the number of contracts added or removed, combined, per day on a monthly basis; the Exchange excludes from the ADAV calculation routed contracts, contracts added or removed on any day that the Exchange experiences an Exchange System Disruption, and contracts added or removed on any day with a scheduled early market close. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 49137 proposes to define ‘‘Options Step-Up Add TCV’’ within the definition of ADAV as ‘‘ADAV as a percentage of TCV in June 2014 subtracted from current ADAV as a percentage of TCV, using the definitions of ADAV and TCV.’’ Currently, for BATS Options, the Exchange provides a rebate of $0.40 per contract for any Professional, Firm or Market Maker order that adds liquidity in Penny Pilot Securities to the BATS Options order book. In addition, Professional, Firm and Market Maker orders can qualify for additional rebates to the extent they establish a new NBBO and are submitted by a Member that qualifies based on volume conducted on BATS Options (the ‘‘NBBO Setter Program’’). Further, Market Makers (but only Market Makers) can qualify for additional rebates under the Quoting Incentive Program (‘‘QIP’’), which is a program that incentivizes Market Maker registration and quoting. In order to provide an additional incentive to Members to submit to the Exchange Professional and Firm orders, the Exchange proposes to adopt an Options Step-Up Tier for BATS Options that would provide a rebate of $0.44 per contract for any Professional or Firm order that adds liquidity to BATS Options and was submitted by a Member that has an Options Step-Up Add TCV equal to or greater than 0.50%. A Member’s Options Step-Up Add TCV would be calculated as the increase in the Member’s current ADAV as a percentage of TCV (‘‘Current Options ADAV’’) over the Member’s ADAV as a percentage of TCV from June 2014 (‘‘Baseline Options ADAV’’). By way of example, where a Member’s Baseline Options ADAV is 0.04% the Member would need to achieve a Current Options ADAV of 0.54% in order to qualify for the Options Step-Up Tier and its $0.44 per contract rebate. The Exchange proposes to continue to provide a rebate $0.40 per contract for all other Professional, Firm and Market Maker orders and does not propose any changes to applicable additional rebates such as QIP and NBBO Setter rebates. Customer Fee To Remove Liquidity— BATS Options The Exchange proposes to reduce the fee charged by BATS Options to remove liquidity for all Customer orders in Penny Pilot Securities. Currently, pricing on BATS Options for removing liquidity is based on the capacity of the order that is executed (i.e., Customer or ‘‘non-Customer’’, which includes all Professional, Firm and Market Maker orders) as well as whether or not the E:\FR\FM\19AUN1.SGM 19AUN1 49138 Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 / Notices security is a Penny Pilot Security. BATS Options currently charges a fee of $0.47 per contract for all Customer orders that remove liquidity in Penny Pilot Securities. To encourage Members to submit Customer orders to the Exchange, the Exchange proposes to reduce this fee to a fee of $0.45 per contract for all Customer orders that remove liquidity in Penny Pilot Securities. tkelley on DSK3SPTVN1PROD with NOTICES Routing Fees—BATS Options Finally, the Exchange proposes to increase the fee charged by BATS Options for Professional, Firm, and Market Maker orders routed to and executed at certain venues. The Exchange currently charges certain flat rates for routing to other options exchanges that have been placed into groups based on the approximate cost of routing to such venues. The grouping of away options exchanges is based on the cost of transaction fees assessed by each venue as well as costs to the Exchange for routing (i.e., clearing fees, connectivity and other infrastructure costs, membership fees, etc.) (collectively, ‘‘Routing Costs’’). The Exchange currently charges $0.57 per contract for Professional, Firm, and Market Maker orders routed to and executed at NYSE MKT LLC (‘‘AMEX’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), the Miami International Securities Exchange, LLC (‘‘MIAX’’), NASDAQ OMX BX, Inc. (‘‘BX Options’’) in Penny Pilot Securities and the International Securities Exchange, LLC (‘‘ISE’’) in Non-Penny Pilot Securities. Based on execution fees charged by some of these venues that exceed the fees currently charged by the Exchange for Professional, Firm and Market Maker orders routed to and executed at such venues (even without taking other Routing Costs into consideration), the Exchange proposes to increase fees for the options venues listed above.15 Specifically, the Exchange proposes to charge $0.60 per contract for Customer orders executed at AMEX, CBOE, MIAX, BX Options (Penny Pilot Securities) and ISE (Non-Penny Pilot Securities). The Exchange is not proposing any changes to pricing for Customer orders routed to and executed at these options venues, which is currently set at a fee of $0.11 per contract. 15 In particular, AMEX currently charges $0.58 to non-Customer orders that remove liquidity in nonPenny Pilot Securities and CBOE currently charges $0.60 to non-Customer orders that remove liquidity in non-Penny Pilot Securities. VerDate Mar<15>2010 16:30 Aug 18, 2014 Jkt 232001 Implementation Date The Exchange proposes to implement these amendments to its fee schedule on August 1, 2014. 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.16 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,17 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 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. Step-Up Tiers—BATS Equities and BATS Options The Exchange believes that providing additional financial incentives to Members that demonstrate an increase over their Baseline ADAV (or Options Baseline ADAV) through the Step-Up Tiers already in place on BATS Equities and the proposed Step-Up Tier for BATS Options offer additional, flexible ways to achieve financial incentives from the Exchange and encourage Members to add increasing amounts of liquidity to both BATS Equities and BATS Options. The Exchange believes that these incentives are reasonable, fair and equitable because the increased liquidity from each of these proposals also benefits all investors by deepening the BATS Equities and BATS Options liquidity pools, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. Such pricing programs thereby reward a Member’s growth pattern and such increased volume increase potential revenue to the Exchange, and will allow the Exchange to continue to provide and potentially expand the incentive programs operated by the Exchange. These pricing programs are also fair and equitable in that they are available to all Members and will result in Members receiving either the same or an increased rebate than they would currently receive. 16 15 17 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(4). Frm 00091 Fmt 4703 Although non-Customer orders are typically treated consistently by the Exchange and the Options Step-Up Tier will only be applied to Professional and Firm orders, and not Market Maker orders, the Exchange believes that this proposal is reasonable not unfairly discriminatory because Market Makers are already able to reach the same rebate level through the QIP, which is not available to Professional or Firm orders. The Exchange also notes that the proposed step-up tier are similar to pricing tiers currently available on Arca.18 Volume-based rebates and fees such as the ones maintained on both BATS Equities and BATS Options as well as the BATS Equities Step-Up Tiers and the new BATS Options Step-Up Tier proposed herein, have been widely adopted by equities and options exchanges and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to the value to an exchange’s market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and introduction of higher volumes of orders into the price and volume discovery processes. Further, the Exchange believes that the Step-Up Tiers will provide such enhancements in market quality on both BATS Equities and BATS Options by incentivizing increased participation on both platforms. The Exchange notes that it is not proposing to modify any existing tiers (other than to re-number the Equities Step-Up Tiers), but rather to add new tiers that will provide Members with additional ways to receive higher rebates. Accordingly, under the proposal a Member will receive either the same or a higher rebate than they would receive today. Accordingly, the Exchange believes that the proposed additions to the Exchange’s tiered pricing structure and incentives are not unfairly discriminatory because they will apply uniformly to all Members and are consistent with the overall goals of enhancing market quality on both BATS Equities and BATS Options. The Exchange again notes that it believes that restricting the availability of the proposed Options Step-Up Tier for BATS Options to Professional and Firm orders is reasonable and not unreasonably discriminatory because Market Maker orders are already afforded an opportunity to receive QIP rebates up to an additional $0.04 per contract that is not available to 18 See Sfmt 4703 E:\FR\FM\19AUN1.SGM supra note 12. 19AUN1 Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 / Notices Professional and Firm orders. Thus, currently, Professional and Firm orders can never receive the same maximum rebate that Market Maker orders can receive but, pursuant to the proposal, there would be a way for all three nonCustomer capacities to achieve such maximum rebate. tkelley on DSK3SPTVN1PROD with NOTICES Customer Fee To Remove Liquidity— BATS Options The Exchange believes that its proposal to reduce the Customer fee to remove liquidity from BATS Options in Penny Pilot Securities is reasonable, fair and equitably allocated because it will reduce the cost of removing liquidity for all Customer orders and is intended to enhance the competitiveness of the Exchange’s pricing model. The fee remains consistent with the fees changes by other markets with similar fee structures, such as NYSE Arca and NOM. The Exchange believes that the proposal is not unreasonably discriminatory because it will apply equally to all Customer orders and is only slightly discounted as compared to the fee to remove liquidity charged for non-Customer orders. Routing Fees—BATS Options As explained above, the Exchange generally attempts to approximate the cost of routing to other options exchanges, including other applicable costs to the Exchange for routing. The Exchange believes that a pricing model based on approximate Routing Costs is a reasonable, fair and equitable approach to pricing. Specifically, the Exchange believes that its proposal to increase fees applicable to Professional, Firm and Market Maker orders routed to and executed at AMEX, CBOE, MIAX, BX Options (Penny Pilot Securities) and ISE (Non-Penny Pilot Securities) is fair, equitable and reasonable because the fees are generally an approximation of the cost to the Exchange for routing orders to such exchanges. The Exchange believes that its flat fee structure for orders routed to various venues is a fair and equitable approach to pricing, as it provides certainty with respect to execution fees at groups of away options exchanges. Under its flat fee structure, taking all costs to the Exchange into account, the Exchange may operate at a slight gain or slight loss for orders routed to and executed at other options exchanges. As a general matter, the Exchange believes that the proposed fees will allow it to recoup and cover its costs of providing routing services to such exchanges. The Exchange also believes that the proposed fee structure for orders routed to and executed at these away options exchanges is fair and VerDate Mar<15>2010 16:30 Aug 18, 2014 Jkt 232001 equitable and not unreasonably discriminatory in that it applies equally to all Members. The Exchange reiterates 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 to be excessive or providers of routing services if they deem fee levels to be excessive. Finally, the Exchange notes that it constantly evaluates its routing fees, including profit and loss attributable to routing, as applicable, in connection with the operation of a flat fee routing service, and would consider future adjustments to the proposed pricing structure to the extent it was recouping a significant profit or loss from routing to other options exchanges. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. With respect to the proposed new tiered rebates, the Exchange does not believe that any such changes burden competition, but instead, enhance competition, as they are intended to increase the competitiveness of and draw additional volume to both BATS Equities and BATS Options. The Exchange also believes the proposed step-up tiers would enhance competition because they are similar to pricing tiers currently available on Arca.19 Similarly, the proposal to reduce the fee for Customer orders that remove liquidity in Penny Pilot Securities is a competitive proposal that is intended to draw volume to BATS Options. As stated above, the Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if the deem fee structures to be unreasonable or excessive. Finally, the Exchange notes that the proposed change to routing fees to certain options exchanges is not intended as a competitive change to create an incentive or disincentive to use the Exchange’s routing strategies to route to these exchanges. Rather, the proposed changes will assist the Exchange in recouping costs for routing orders to other options exchanges on behalf of its participants in a manner that is a better approximation of actual costs than is currently in place. The Exchange also notes that Members may choose to mark their orders as ineligible 19 See PO 00000 supra note 12. Frm 00092 Fmt 4703 Sfmt 4703 49139 for routing to avoid incurring routing fees.20 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 21 and paragraph (f) of Rule 19b–4 thereunder.22 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BATS–2014–030 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–BATS–2014–030. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the 20 See BATS Rule 21.1(d)(8) (describing ‘‘BATS Only’’ orders for BATS Options) and BATS Rule 21.9(a)(1) (describing the BATS Options routing process, which requires orders to be designated as available for routing). 21 15 U.S.C. 78s(b)(3)(A). 22 17 CFR 240.19b–4(f). E:\FR\FM\19AUN1.SGM 19AUN1 49140 Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 / Notices 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 Number SR–BATS– 2014–030, and should be submitted on or before September 9, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–19578 Filed 8–18–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72835; File No. SR–MIAX– 2014–30] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change To List and Trade Options on Shares of the iShare ETFs ETF (collectively ‘‘iShare ETFs’’). The proposed rule change was published for comment in the Federal Register on July 3, 2014.3 No comments were received on the proposed rule change. Section 19(b)(2) of the Act 4 provides that within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is August 17, 2014. The Commission is extending this 45-day time period. The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider this proposed rule change. The proposed rule change, if approved, would allow the Exchange to list for trading options on shares of the iShare ETFs for which the Exchange has not entered into comprehensive surveillance sharing agreements with the underlying foreign markets. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 designates October 1, 2014, as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File No. SR–MIAX–2014–30). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–19580 Filed 8–18–14; 8:45 am] BILLING CODE 8011–01–P tkelley on DSK3SPTVN1PROD with NOTICES August 13, 2014. On June 17, 2014, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade on the Exchange options on shares of the iShares MSCI Brazil Capped ETF, iShares MSCI Chile Capped ETF, iShares MSCI Peru Capped ETF, and iShares MSCI Spain Capped 23 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:30 Aug 18, 2014 Jkt 232001 TENNESSEE VALLEY AUTHORITY [Meeting No. 14–03] Sunshine Act Meeting Notice August 21, 2014. The TVA Board of Directors will hold a public meeting on August 21, 2014, in the TVA West Tower Auditorium, 400 West Summit Hill Drive, Knoxville, Tennessee. Members of the public may 3 See Securities Exchange Act Release No. 72492 (June 27, 2014), 79 FR 38099. 4 15 U.S.C. 78s(b)(2). 5 15 U.S.C. 78s(b)(2). 6 17 CFR 200.30–3(a)(31). PO 00000 Frm 00093 Fmt 4703 Sfmt 9990 comment on any agenda item or subject at a public listening session which begins at 8:30 a.m. (e.t). Registration of speakers at the public listening session is required. Speakers may preregister at www.tva.com/abouttva/board/, or register on-site until 15 minutes before the public listening session begins. Preregistered speakers will address the Board first. Following the public listening session, the meeting will be called to order to consider the agenda items listed below. TVA management will answer questions from the news media following the Board meeting. Status: Open Agenda Old Business Approval of minutes of May 8, 2014, Board meeting New Business 1. Chairman’s welcome 2. Report from President and CEO 3. Report of the External Relations Committee 4. Report of the Finance, Rates, and Portfolio Committee A. FY 2015 Financial plan and budget B. Financing authority C. Rate actions D. Generation fleet planning—Allen Fossil Plant 5. Report of the Audit, Risk, and Regulation Committee A. Policy on Audit and Non-Audit Permissible Services B. FY 2015 external auditor selection 6. Report of the People and Performance Committee A. Corporate goals B. Bylaws Revision to Section 1.7 7. Report of the Nuclear Oversight Committee A. Watts Bar 2 Update 8. Information Items A. Power supply arrangements with an industrial customer B. Kingston claims settlement For more information: Please call TVA Media Relations at (865) 632–6000, Knoxville, Tennessee. People who plan to attend the meeting and have special needs should call (865) 632–6000. Anyone who wishes to comment on the agenda in writing may send their comments to: TVA Board of Directors, Board Agenda Comments, 400 West Summit Hill Drive, Knoxville, Tennessee 37902. Dated: August 14, 2014. Ralph E. Rodgers, General Counsel and Secretary. [FR Doc. 2014–19720 Filed 8–15–14; 11:15 am] BILLING CODE 8120–08–P E:\FR\FM\19AUN1.SGM 19AUN1

Agencies

[Federal Register Volume 79, Number 160 (Tuesday, August 19, 2014)]
[Notices]
[Pages 49136-49140]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19578]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72830; File No. SR-BATS-2014-030]


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

August 13, 2014.
    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 August 1, 2014, 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 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

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

    \5\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at http://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 modify its fee schedule applicable to use 
of the Exchange in order to: (i) Add an additional ``Step-Up Tier'' for 
purposes of tiered pricing applicable to the Exchange's equities 
trading platform (``BATS Equities''); (ii) introduce an ``Options Step-
Up Tier'' and a corresponding definition of ``Options Step-Up Add TCV'' 
for purposes of tiered pricing applicable to the Exchange's equity 
options trading platform (``BATS Options''); (iii) reduce the fee 
charged by BATS Options to remove liquidity for all Customer \6\ orders 
in securities subject to the options penny pilot program (``Penny Pilot 
Securities''); and (iv) increase the fee charged by BATS Options for 
Professional,\7\ Firm, and Market Maker \8\ orders routed to and 
executed at certain venues.
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    \6\ As defined on the Exchange's fee schedule, a ``Customer'' 
order is any transaction identified by a Member for clearing in the 
Customer range at the Options Clearing Corporation (``OCC''), except 
for those designated as ``Professional''.
    \7\ The term ``Professional'' is defined in Exchange Rule 16.1 
to mean any person or entity that (A) is not a broker or dealer in 
securities, and (B) places more than 390 orders in listed options 
per day on average during a calendar month for its own beneficial 
account(s).
    \8\ As defined on the Exchange's fee schedule, the terms 
``Firm'' and ``Market Maker'' apply to any transaction identified by 
a member for clearing in the Firm or Market Maker range, 
respectively, at the Options Clearing Corporation (``OCC'').
---------------------------------------------------------------------------

Additional Step-Up Tier--BATS Equities
    Currently, with respect to BATS Equities, the Exchange determines 
the liquidity adding rebate that it will provide to Members using the 
Exchange's tiered pricing structure, which is based on the Member 
meeting certain volume tiers based on their

[[Page 49137]]

ADAV \9\ as a percentage of TCV \10\ or ADV \11\ as a percentage of 
TCV. Under such pricing structure, a Member will receive an adding 
rebate of anywhere between $0.0020 and $0.0032 per share executed, 
depending on the volume tier for which such Member qualifies. The 
Exchange also maintains two additional types of tiers in addition to 
the volume tiers described above: Step-Up Tiers and a Cross-Asset Step-
Up tier. The Step-Up Tier and Cross-Asset Step-Up tier provide Members 
with additional ways to qualify for enhanced rebates.
---------------------------------------------------------------------------

    \9\ As provided in the fee schedule, for purposes of BATS 
Equities pricing, ``ADAV'' means average daily added volume 
calculated as the number of shares added per day on a monthly basis; 
the Exchange excludes from the ADAV calculation routed shares as 
well as shares added on any day that the Exchange's system 
experiences a disruption that lasts for more than 60 minutes during 
regular trading hours (``Exchange System Disruption''), on any day 
with a scheduled early market close and on the last Friday in June 
(the ``Russell Reconstitution Day'').
    \10\ As provided in the fee schedule, for purposes of BATS 
Equities pricing, ``TCV'' means total consolidated volume calculated 
as the volume reported by all exchanges and trade reporting 
facilities to a consolidated transaction reporting plan for the 
month for which the fees apply, excluding volume on any day that the 
Exchange experiences an Exchange System Disruption, on any with a 
scheduled early market close and the Russell Reconstitution Day.
    \11\ As provided in the fee schedule, for purposes of BATS 
Equities pricing, ``ADV'' means average daily volume calculated as 
the number of shares added or removed, combined, per day on a 
monthly basis; the Exchange excludes from the ADV calculation routed 
shares, and shares added on any day that the Exchange's system 
experiences an Exchange System Disruption, on any day with a 
scheduled early market close and on the Russell Reconstitution Day.
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    As proposed, the existing volume tiers, including the Step-Up Tiers 
and Cross-Asset Step-Up Tier will remain the same. However, the 
Exchange proposes to add a new tier to its fee schedule as Step-Up Tier 
1, and to re-number the existing tiers as Step-Up Tiers 2 and 3. The 
new proposed Step-Up Tier 1 would provide a rebate of $0.0025 per share 
where the Member's Step-Up Add TCV is equal to or greater than 0.07%. 
For purposes of BATS Equities pricing, the Exchange defines the term 
``Step-Up Add TCV'' within the definition of ADAV as a percentage of 
TCV in January 2014 subtracted from current ADAV as a percentage of 
TCV. This definition would remain unchanged.
    A Member's Step-Up Add TCV is calculated as the increase in the 
Member's current ADAV as a percentage of TCV (``Current ADAV'') over 
the Member's ADAV as a percentage of TCV from January 2014 (``Baseline 
ADAV''). By way of example, where a Member's Baseline ADAV is 0.07%, 
the Member would qualify for new Step-Up Tier 1 if the Member's Current 
ADAV is at least 0.14%. The Exchange is not proposing any changes to 
pricing for BATS Equities other than the addition of the new Step-Up 
Tier 1 and the re-numbering of the existing Step-Up Tiers.
    The Exchange's Step-Up Tiers, including the new proposed tier, are 
designed to incentivize Members to increase their participation on the 
Exchange in terms of their ADAV compared to their January 2014 ADAV. 
The Exchange notes that the Step-Up tiers are similar to step-up tiers 
currently employed by NYSE Arca, Inc. (``Arca'').\12\ As is currently 
the case pursuant to the fee schedule, a Member will receive the higher 
of the volume rebates, step-up rebates, or cross-asset step-up rebates 
for which they qualify.
---------------------------------------------------------------------------

    \12\ See Exchange Act Release No. 64820 (July 12, 2011), 76 FR 
40974 (July 6, 2011) (SR-NYSEArca-2011-41) [sic].
---------------------------------------------------------------------------

Options Step-Up Tier--BATS Options
    The Exchange also proposes to introduce an ``Options Step-Up Tier'' 
and a corresponding definition of ``Options Step-Up Add TCV'' for 
purposes of tiered pricing applicable to adding liquidity in Penny 
Pilot Securities to BATS Options. The Exchange notes that it already 
maintains an Options Step-Up Tier for purposes of tiered pricing 
applicable to BATS Equities. The Exchange also notes that the 
definitions within the Options Pricing portion of the fee schedule of 
TCV (``Options TCV'') \13\ and ADAV (``Options ADAV'') \14\ are similar 
to but different than those under the Equities Pricing portion of the 
fee schedule.
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    \13\ As provided in the fee schedule, for purposes of BATS 
Options pricing, ``TCV'' means total consolidated volume calculated 
as the volume reported by all exchanges to the consolidated 
transaction reporting plan for the month for which the fees apply, 
excluding volume on any day that the Exchange experiences an 
Exchange System Disruption and on any day with a scheduled early 
market close.
    \14\ As provided in the fee schedule, for purposes of BATS 
Options pricing, ``ADAV'' means average daily volume calculated as 
the number of contracts added or removed, combined, per day on a 
monthly basis; the Exchange excludes from the ADAV calculation 
routed contracts, contracts added or removed on any day that the 
Exchange experiences an Exchange System Disruption, and contracts 
added or removed on any day with a scheduled early market close.
---------------------------------------------------------------------------

    The Exchange notes that its proposed definition of Options Step-Up 
Add TCV for BATS Options pricing mirrors the definition of Options 
Step-Up Add TCV under BATS Equities pricing with the exception of the 
applicable baseline, which, for BATS Options is proposed to be June 
2014 and for BATS Equities is January 2014. Thus, for purposes of BATS 
Options pricing, the Exchange proposes to define ``Options Step-Up Add 
TCV'' within the definition of ADAV as ``ADAV as a percentage of TCV in 
June 2014 subtracted from current ADAV as a percentage of TCV, using 
the definitions of ADAV and TCV.''
    Currently, for BATS Options, the Exchange provides a rebate of 
$0.40 per contract for any Professional, Firm or Market Maker order 
that adds liquidity in Penny Pilot Securities to the BATS Options order 
book. In addition, Professional, Firm and Market Maker orders can 
qualify for additional rebates to the extent they establish a new NBBO 
and are submitted by a Member that qualifies based on volume conducted 
on BATS Options (the ``NBBO Setter Program''). Further, Market Makers 
(but only Market Makers) can qualify for additional rebates under the 
Quoting Incentive Program (``QIP''), which is a program that 
incentivizes Market Maker registration and quoting.
    In order to provide an additional incentive to Members to submit to 
the Exchange Professional and Firm orders, the Exchange proposes to 
adopt an Options Step-Up Tier for BATS Options that would provide a 
rebate of $0.44 per contract for any Professional or Firm order that 
adds liquidity to BATS Options and was submitted by a Member that has 
an Options Step-Up Add TCV equal to or greater than 0.50%.
    A Member's Options Step-Up Add TCV would be calculated as the 
increase in the Member's current ADAV as a percentage of TCV (``Current 
Options ADAV'') over the Member's ADAV as a percentage of TCV from June 
2014 (``Baseline Options ADAV''). By way of example, where a Member's 
Baseline Options ADAV is 0.04% the Member would need to achieve a 
Current Options ADAV of 0.54% in order to qualify for the Options Step-
Up Tier and its $0.44 per contract rebate.
    The Exchange proposes to continue to provide a rebate $0.40 per 
contract for all other Professional, Firm and Market Maker orders and 
does not propose any changes to applicable additional rebates such as 
QIP and NBBO Setter rebates.
Customer Fee To Remove Liquidity--BATS Options
    The Exchange proposes to reduce the fee charged by BATS Options to 
remove liquidity for all Customer orders in Penny Pilot Securities. 
Currently, pricing on BATS Options for removing liquidity is based on 
the capacity of the order that is executed (i.e., Customer or ``non-
Customer'', which includes all Professional, Firm and Market Maker 
orders) as well as whether or not the

[[Page 49138]]

security is a Penny Pilot Security. BATS Options currently charges a 
fee of $0.47 per contract for all Customer orders that remove liquidity 
in Penny Pilot Securities. To encourage Members to submit Customer 
orders to the Exchange, the Exchange proposes to reduce this fee to a 
fee of $0.45 per contract for all Customer orders that remove liquidity 
in Penny Pilot Securities.
Routing Fees--BATS Options
    Finally, the Exchange proposes to increase the fee charged by BATS 
Options for Professional, Firm, and Market Maker orders routed to and 
executed at certain venues.
    The Exchange currently charges certain flat rates for routing to 
other options exchanges that have been placed into groups based on the 
approximate cost of routing to such venues. The grouping of away 
options exchanges is based on the cost of transaction fees assessed by 
each venue as well as costs to the Exchange for routing (i.e., clearing 
fees, connectivity and other infrastructure costs, membership fees, 
etc.) (collectively, ``Routing Costs'').
    The Exchange currently charges $0.57 per contract for Professional, 
Firm, and Market Maker orders routed to and executed at NYSE MKT LLC 
(``AMEX''), the Chicago Board Options Exchange, Incorporated 
(``CBOE''), the Miami International Securities Exchange, LLC 
(``MIAX''), NASDAQ OMX BX, Inc. (``BX Options'') in Penny Pilot 
Securities and the International Securities Exchange, LLC (``ISE'') in 
Non-Penny Pilot Securities.
    Based on execution fees charged by some of these venues that exceed 
the fees currently charged by the Exchange for Professional, Firm and 
Market Maker orders routed to and executed at such venues (even without 
taking other Routing Costs into consideration), the Exchange proposes 
to increase fees for the options venues listed above.\15\ Specifically, 
the Exchange proposes to charge $0.60 per contract for Customer orders 
executed at AMEX, CBOE, MIAX, BX Options (Penny Pilot Securities) and 
ISE (Non-Penny Pilot Securities). The Exchange is not proposing any 
changes to pricing for Customer orders routed to and executed at these 
options venues, which is currently set at a fee of $0.11 per contract.
---------------------------------------------------------------------------

    \15\ In particular, AMEX currently charges $0.58 to non-Customer 
orders that remove liquidity in non-Penny Pilot Securities and CBOE 
currently charges $0.60 to non-Customer orders that remove liquidity 
in non-Penny Pilot Securities.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule on August 1, 2014.
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.\16\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\17\ 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 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.
---------------------------------------------------------------------------

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

Step-Up Tiers--BATS Equities and BATS Options
    The Exchange believes that providing additional financial 
incentives to Members that demonstrate an increase over their Baseline 
ADAV (or Options Baseline ADAV) through the Step-Up Tiers already in 
place on BATS Equities and the proposed Step-Up Tier for BATS Options 
offer additional, flexible ways to achieve financial incentives from 
the Exchange and encourage Members to add increasing amounts of 
liquidity to both BATS Equities and BATS Options. The Exchange believes 
that these incentives are reasonable, fair and equitable because the 
increased liquidity from each of these proposals also benefits all 
investors by deepening the BATS Equities and BATS Options liquidity 
pools, offering additional flexibility for all investors to enjoy cost 
savings, supporting the quality of price discovery, promoting market 
transparency and improving investor protection. Such pricing programs 
thereby reward a Member's growth pattern and such increased volume 
increase potential revenue to the Exchange, and will allow the Exchange 
to continue to provide and potentially expand the incentive programs 
operated by the Exchange. These pricing programs are also fair and 
equitable in that they are available to all Members and will result in 
Members receiving either the same or an increased rebate than they 
would currently receive. Although non-Customer orders are typically 
treated consistently by the Exchange and the Options Step-Up Tier will 
only be applied to Professional and Firm orders, and not Market Maker 
orders, the Exchange believes that this proposal is reasonable not 
unfairly discriminatory because Market Makers are already able to reach 
the same rebate level through the QIP, which is not available to 
Professional or Firm orders. The Exchange also notes that the proposed 
step-up tier are similar to pricing tiers currently available on 
Arca.\18\
---------------------------------------------------------------------------

    \18\ See supra note 12.
---------------------------------------------------------------------------

    Volume-based rebates and fees such as the ones maintained on both 
BATS Equities and BATS Options as well as the BATS Equities Step-Up 
Tiers and the new BATS Options Step-Up Tier proposed herein, have been 
widely adopted by equities and options exchanges and are equitable 
because they are open to all Members on an equal basis and provide 
additional benefits or discounts that are reasonably related to the 
value to an exchange's market quality associated with higher levels of 
market activity, such as higher levels of liquidity provision and/or 
growth patterns, and introduction of higher volumes of orders into the 
price and volume discovery processes. Further, the Exchange believes 
that the Step-Up Tiers will provide such enhancements in market quality 
on both BATS Equities and BATS Options by incentivizing increased 
participation on both platforms. The Exchange notes that it is not 
proposing to modify any existing tiers (other than to re-number the 
Equities Step-Up Tiers), but rather to add new tiers that will provide 
Members with additional ways to receive higher rebates. Accordingly, 
under the proposal a Member will receive either the same or a higher 
rebate than they would receive today. Accordingly, the Exchange 
believes that the proposed additions to the Exchange's tiered pricing 
structure and incentives are not unfairly discriminatory because they 
will apply uniformly to all Members and are consistent with the overall 
goals of enhancing market quality on both BATS Equities and BATS 
Options. The Exchange again notes that it believes that restricting the 
availability of the proposed Options Step-Up Tier for BATS Options to 
Professional and Firm orders is reasonable and not unreasonably 
discriminatory because Market Maker orders are already afforded an 
opportunity to receive QIP rebates up to an additional $0.04 per 
contract that is not available to

[[Page 49139]]

Professional and Firm orders. Thus, currently, Professional and Firm 
orders can never receive the same maximum rebate that Market Maker 
orders can receive but, pursuant to the proposal, there would be a way 
for all three non-Customer capacities to achieve such maximum rebate.
Customer Fee To Remove Liquidity--BATS Options
    The Exchange believes that its proposal to reduce the Customer fee 
to remove liquidity from BATS Options in Penny Pilot Securities is 
reasonable, fair and equitably allocated because it will reduce the 
cost of removing liquidity for all Customer orders and is intended to 
enhance the competitiveness of the Exchange's pricing model. The fee 
remains consistent with the fees changes by other markets with similar 
fee structures, such as NYSE Arca and NOM. The Exchange believes that 
the proposal is not unreasonably discriminatory because it will apply 
equally to all Customer orders and is only slightly discounted as 
compared to the fee to remove liquidity charged for non-Customer 
orders.
Routing Fees--BATS Options
    As explained above, the Exchange generally attempts to approximate 
the cost of routing to other options exchanges, including other 
applicable costs to the Exchange for routing. The Exchange believes 
that a pricing model based on approximate Routing Costs is a 
reasonable, fair and equitable approach to pricing. Specifically, the 
Exchange believes that its proposal to increase fees applicable to 
Professional, Firm and Market Maker orders routed to and executed at 
AMEX, CBOE, MIAX, BX Options (Penny Pilot Securities) and ISE (Non-
Penny Pilot Securities) is fair, equitable and reasonable because the 
fees are generally an approximation of the cost to the Exchange for 
routing orders to such exchanges. The Exchange believes that its flat 
fee structure for orders routed to various venues is a fair and 
equitable approach to pricing, as it provides certainty with respect to 
execution fees at groups of away options exchanges. Under its flat fee 
structure, taking all costs to the Exchange into account, the Exchange 
may operate at a slight gain or slight loss for orders routed to and 
executed at other options exchanges. As a general matter, the Exchange 
believes that the proposed fees will allow it to recoup and cover its 
costs of providing routing services to such exchanges. The Exchange 
also believes that the proposed fee structure for orders routed to and 
executed at these away options exchanges is fair and equitable and not 
unreasonably discriminatory in that it applies equally to all Members.
    The Exchange reiterates 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 to be excessive or providers 
of routing services if they deem fee levels to be excessive. Finally, 
the Exchange notes that it constantly evaluates its routing fees, 
including profit and loss attributable to routing, as applicable, in 
connection with the operation of a flat fee routing service, and would 
consider future adjustments to the proposed pricing structure to the 
extent it was recouping a significant profit or loss from routing to 
other options exchanges.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. With 
respect to the proposed new tiered rebates, the Exchange does not 
believe that any such changes burden competition, but instead, enhance 
competition, as they are intended to increase the competitiveness of 
and draw additional volume to both BATS Equities and BATS Options. The 
Exchange also believes the proposed step-up tiers would enhance 
competition because they are similar to pricing tiers currently 
available on Arca.\19\ Similarly, the proposal to reduce the fee for 
Customer orders that remove liquidity in Penny Pilot Securities is a 
competitive proposal that is intended to draw volume to BATS Options. 
As stated above, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily direct 
order flow to competing venues if the deem fee structures to be 
unreasonable or excessive. Finally, the Exchange notes that the 
proposed change to routing fees to certain options exchanges is not 
intended as a competitive change to create an incentive or disincentive 
to use the Exchange's routing strategies to route to these exchanges. 
Rather, the proposed changes will assist the Exchange in recouping 
costs for routing orders to other options exchanges on behalf of its 
participants in a manner that is a better approximation of actual costs 
than is currently in place. The Exchange also notes that Members may 
choose to mark their orders as ineligible for routing to avoid 
incurring routing fees.\20\
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    \19\ See supra note 12.
    \20\ See BATS Rule 21.1(d)(8) (describing ``BATS Only'' orders 
for BATS Options) and BATS Rule 21.9(a)(1) (describing the BATS 
Options routing process, which requires orders to be designated as 
available for routing).
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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 \21\ and paragraph (f) of Rule 19b-4 
thereunder.\22\ 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.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BATS-2014-030 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-BATS-2014-030. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the

[[Page 49140]]

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 Number SR-BATS-2014-030, and should be 
submitted on or before September 9, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-19578 Filed 8-18-14; 8:45 am]
BILLING CODE 8011-01-P