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., 64445-64447 [2014-25667]

Download as PDF Federal Register / Vol. 79, No. 209 / Wednesday, October 29, 2014 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73413; File No. SR–BATS– 2014–051] 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. October 23, 2014. 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 October 16, 2014, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS ’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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 3 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. mstockstill on DSK4VPTVN1PROD with NOTICES 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. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 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). 2 17 VerDate Sep<11>2014 16:21 Oct 28, 2014 Jkt 235001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On April 17, 2014, the Exchange filed a proposal to adopt rules to create a Lead Market Maker Program (the ‘‘Program’’) on an immediately effective basis.4 The Exchange then filed a proposal to adopt pricing related to the Program on May 28, 2014.5 The Program was implemented on June 2, 2014. The Program provides enhanced rebates to market makers registered with the Exchange (‘‘Market Makers’’) 6 that are also registered as a lead market maker (‘‘LMM’’) in an LMM Security 7 and meet certain minimum quoting standards (‘‘Minimum Performance Standards’’) 8 in BATS-listed ETPs 9 based on the consolidated average daily volume (‘‘CADV’’) of the security. The annual listing fee for an ETP is also based on the CADV of the security and was designed to offset the enhanced rebates paid to LMMs in the security. The Program was intended to strengthen market quality for BATS-listed ETPs. The Program, however, has not been adopted by issuers and market participants as readily as the Exchange had originally anticipated and there are currently no BATS-listed ETPs participating in the Program. The purpose of this filing is to eliminate such enhanced rebates and to make corresponding clarifying changes to the fee schedule. In coordination with this filing to eliminate the enhanced rebates for LMMs in LMM Securities, the Exchange has filed a separate filing to eliminate all annual listing fees for BATS-listed ETPs.10 The Exchange proposes to modify its pricing for orders that add displayed liquidity in LMM Securities entered by LMMs that meet the Minimum Performance Standards (a ‘‘Qualified LMM’’). The Exchange is proposing to eliminate its existing tiered rebate structure that is based on the CADV of 4 See Securities Exchange Act Release No. 72020 (April 25, 2014) 79 FR 24807 (May 1, 2014) (SR– BATS–2014–015). 5 See Securities Exchange Act Release No. 72333 (June 5, 2014) 79 FR 33630 (June 11, 2014) (SR– BATS–2014–019). 6 See BATS Rule 11.5. 7 As defined in Rule 11.8(e)(1)(C), LMM Security means an ETP that has an LMM. 8 As defined in Rule 11.8(e)(1)(D), Minimum Performance Standards means a set of standards applicable to an LMM that may be determined from time to time by the Exchange. 9 As defined in Rule 11.8(e)(1)(A), ETP means any security listed pursuant to Exchange Rule 14.11. 10 See SR–BATS–2014–050, filed October 16, 2014, available at: http://www.batstrading.com/ regulation/rule_filings/bzx/. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 64445 the LMM Security.11 Currently, unless an LMM otherwise qualifies for a higher rebate, a Qualified LMM shall receive the following rebates for each share of added displayed liquidity: where the CADV is 10,000 or less, $0.0070; where the CADV is between 10,001 and 40,000, $0.0050; where the CADV is between 40,001 and 80,000, $0.0045; where the CADV is between 80,001 and 150,000, $0.0040; and where the CADV is greater than 150,000, $0.0035. While not possible under the current pricing structure, in the event that a Qualified LMM is ever eligible to receive a higher per share rebate under non-LMM pricing, the Qualified LMM will receive such higher non-LMM rebate. As currently implemented, LMM rebates are not eligible for additional rebates like the NBBO Setter or NBBO Joiner rebates currently offered by the Exchange. The Exchange is proposing to eliminate enhanced rebates for Qualifying LMMs that add liquidity in LMM securities and instead apply the standard fees and rebates to all Members in all securities, including BATS-listed securities. The Exchange is not proposing to make any other changes to its existing price structure. The Exchange is also not proposing to terminate operation of the Program. Thus, while LMMs will not receive enhanced rebates in BATS-listed ETPs, Market Makers may continue to register as LMMs in such BATS-listed ETPs in accordance with BATS Rule 11.8(e). Corresponding Changes Finally, the Exchange proposes to make several non-substantive changes to the fee schedule, including removal of the text of footnote 3, which defines the term CADV, and reserving the footnote in order to maintain the current numbering of footnotes in the fee schedule. 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.12 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) and 6(b)(5) of the 11 As defined in the proposed fee schedule, ‘‘CADV’’ means consolidated average daily volume calculated as the average daily volume reported for a security by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the three calendar months preceding the month for which the fees apply. 12 15 U.S.C. 78f. E:\FR\FM\29OCN1.SGM 29OCN1 mstockstill on DSK4VPTVN1PROD with NOTICES 64446 Federal Register / Vol. 79, No. 209 / Wednesday, October 29, 2014 / Notices Act,13 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 and it does not unfairly discriminate between customers, issuers, brokers or dealers. 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. The Exchange believes that the proposal to eliminate LMM rebates is reasonable, equitable, and not unfairly discriminatory because it will result in standard fees and rebates being applied equally to all Members of the Exchange. Further, the potential decrease in rebates to LMMs in LMM Securities is reasonable, equitable, and not unfairly discriminatory because there are not currently any LMM Securities listed on the Exchange. The Exchange further believes that the proposal, especially when considered in conjunction with a separate proposal filed today that will eliminate annual listing fees for ETPs listed on the Exchange,14 will encourage the development of new financial products, provide a better trading environment for investors in ETPs, and generally encourage greater competition between listing venues by allowing the Exchange to provide issuers with a venue on which they are able to list ETPs without having to pay annual fees. Based on the foregoing, the Exchange believes that the proposed amendments to the fee schedule 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 and it does not unfairly discriminate between customers, issuers, brokers or dealers. Further, the Exchange believes that, combined with the amendment to eliminate annual listing fees, [sic] will enhance the Exchange’s ability to compete as a listing venue in ETPs by allowing the Exchange to provide listing services without annual fees that it would otherwise not be able to provide if it continued to offer enhanced rebates. Accordingly, by allowing the Exchange to better compete as a listing venue, the Exchange believes that the proposal is designed to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect 13 15 U.S.C. 78f(b)(4) and (5). supra note 10. 16:21 Oct 28, 2014 Corresponding Changes Finally, the Exchange believes that the clarifying change that deletes the text of footnote 3 and designates it as being reserved is reasonable as it will help to avoid confusion for those that review the Exchange’s fee schedule. The Exchange notes that this proposed change is not designed to amend any fee or rebate, nor alter the manner in which it assesses fees or calculates rebates. The Exchange believes that the proposed amendment is intended to make the fee schedule clearer and less confusing for investors and eliminate potential investor confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. 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. The Exchange does not believe that the changes burden competition, but instead, enhance competition, as they are made in conjunction with the elimination of annual fees for ETPs listed on the Exchange,16 as described above, which the Exchange believes will increase the competitiveness of the Exchange’s listings program. 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 [sic] deem fee structures to be unreasonable or excessive. As such, the proposal is a competitive proposal that is intended to enhance the Exchange’s ability to compete as a listing venue for ETPs, which will, in turn, benefit the Exchange, ETP issuers, and all Exchange participants. In addition, the Exchange believes that the proposed non-substantive changes to the footnotes on the fee schedule would not affect intermarket nor intramarket competition because the changes do not 15 15 14 See VerDate Sep<11>2014 investors and the public interest. Further, the Exchange believes that the proposal will enhance the Exchange’s program for listing securities on the Exchange, which will, in turn, provide issuers with another option for raising capital in the public markets, thereby promoting the principles discussed in Section 6(b)(5) of the Act.15 U.S.C. 78f(b)(5). supra note 10. PO 00000 Frm 00090 Fmt 4703 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and paragraph (f) of Rule 19b–4 thereunder.18 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 rulecomments@sec.gov. Please include File Number SR–BATS–2014–051 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–2014–051. 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 17 15 16 See Jkt 235001 alter any fees or rebates on the Exchange or the criteria associated therewith. 18 17 Sfmt 4703 E:\FR\FM\29OCN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 29OCN1 Federal Register / Vol. 79, No. 209 / Wednesday, October 29, 2014 / Notices 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 offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BATS– 2014–051, and should be submitted on or before November 19, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M. O’ Neill, Deputy Secretary. [FR Doc. 2014–25667 Filed 10–28–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73410; File No. SR–BX– 2014–048] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of a Proposed Rule Change To Establish the Retail Price Improvement Program on a Pilot Basis Expiring Twelve Months From the Date of Implementation mstockstill on DSK4VPTVN1PROD with NOTICES October 23, 2014. 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 October 17, 2014, NASDAQ OMX BX, Inc. (‘‘BX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:21 Oct 28, 2014 Jkt 235001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposed rule change that would adopt new BX Rule 4780 to establish a Retail Price Improvement (‘‘RPI’’) Program (the ‘‘Program’’ or ‘‘proposed rule change’’) to attract additional retail order flow to the Exchange while also providing the potential for price improvement to such order flow. The Exchange has designated December 1, 2014 as the date the proposed rule change becomes effective. The text of the proposed rule change is available from the Exchange’s Web site at http:// nasdaqomxbx.cchwallstreet.com/ Filings/, at the Exchange’s principal office, 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background The Exchange is proposing a one-year pilot program that would add new BX Rule 4780 to establish an RPI Program to attract additional retail order flow to the Exchange while also providing the potential for price improvement to such order flow.3 Under the proposed rule change, the Exchange would create a new class of market participant called a Retail Member Organization (‘‘RMO’’), which would be eligible to submit certain retail order flow (‘‘Retail 3 This filing is substantially the same to the one establishing the RPI pilot by The NASDAQ Stock Market LLC (‘‘NASDAQ’’). The NASDAQ pilot program expires on December 31, 2014. See Securities Exchange Act Release No. 68937 (February 15, 2013), 78 FR 12397 (February 22, 2013) (‘‘RPI Approval Order’’) (SR–NASDAQ–2012– 129). PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 64447 Orders’’) to the Exchange. As proposed, BX members (‘‘Members’’) will be permitted to provide potential price improvement for Retail Orders in the form of non-displayed interest that is priced more aggressively than the Protected National Best Bid or Offer (‘‘Protected NBBO’’).4 Definitions The Exchange proposes to adopt the following definitions under proposed BX Rule 4780. First, the term ‘‘Retail Member Organization’’ (or ‘‘RMO’’) would be defined as a Member (or a division thereof) that has been approved by the Exchange to submit Retail Orders. Second, the term ‘‘Retail Order’’ would be defined as an agency order, or riskless principal order that satisfies the criteria of FINRA Rule 5320.03, that originates from a natural person and is submitted to the Exchange by an RMO, provided that no change is made to the terms of the order with respect to price (except in the case of a market order being changed to a marketable limit order) or side of market and the order does not originate from a trading algorithm or any other computerized methodology. The criteria set forth in FINRA Rule 5320.03 adds additional precision to the definition of ‘‘Retail Order’’ by clarifying that an RMO may enter Retail Orders on a riskless principal basis, provided that (i) the entry of such riskless principal orders meet the requirements of FINRA Rule 5320.03, including that the RMO maintains supervisory systems to reconstruct, in a time-sequenced manner, all Retail Orders that are entered on a riskless principal basis; and (ii) the RMO submits a report, contemporaneously with the execution of the facilitated order, that identifies the trade as riskless principal. The term ‘‘Retail Price Improvement Order’’ or ‘‘RPI Order’’ or collectively ‘‘RPI interest’’ would be defined as nondisplayed liquidity on the Exchange that is priced more aggressively than the Protected NBBO by at least $0.001 and that is identified as an RPI Order in a 4 The term Protected Quotation is defined in Chapter XII, Sec. 1(19) and has the same meaning as is set forth in Regulation NMS Rule 600(b)(58). The Protected NBBO is the best-priced protected bid and offer. Generally, the Protected NBBO and the national best bid and offer (‘‘NBBO’’) will be the same. However, a market center is not required to route to the NBBO if that market center is subject to an exception under Regulation NMS Rule 611(b)(1) or if such NBBO is otherwise not available for an automatic execution. In such case, the Protected NBBO would be the best-priced protected bid or offer to which a market center must route interest pursuant to Regulation NMS Rule 611. E:\FR\FM\29OCN1.SGM 29OCN1

Agencies

[Federal Register Volume 79, Number 209 (Wednesday, October 29, 2014)]
[Notices]
[Pages 64445-64447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25667]



[[Page 64445]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73413; File No. SR-BATS-2014-051]


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.

October 23, 2014.
    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 October 16, 2014, BATS Exchange, Inc. (the ``Exchange'' or ``BATS 
'') filed with the Securities and Exchange Commission (``Commission'') 
a proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

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

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \3\ and non-members of the Exchange pursuant to BATS Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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    \3\ 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).
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    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On April 17, 2014, the Exchange filed a proposal to adopt rules to 
create a Lead Market Maker Program (the ``Program'') on an immediately 
effective basis.\4\ The Exchange then filed a proposal to adopt pricing 
related to the Program on May 28, 2014.\5\ The Program was implemented 
on June 2, 2014.
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    \4\ See Securities Exchange Act Release No. 72020 (April 25, 
2014) 79 FR 24807 (May 1, 2014) (SR-BATS-2014-015).
    \5\ See Securities Exchange Act Release No. 72333 (June 5, 2014) 
79 FR 33630 (June 11, 2014) (SR-BATS-2014-019).
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    The Program provides enhanced rebates to market makers registered 
with the Exchange (``Market Makers'') \6\ that are also registered as a 
lead market maker (``LMM'') in an LMM Security \7\ and meet certain 
minimum quoting standards (``Minimum Performance Standards'') \8\ in 
BATS-listed ETPs \9\ based on the consolidated average daily volume 
(``CADV'') of the security. The annual listing fee for an ETP is also 
based on the CADV of the security and was designed to offset the 
enhanced rebates paid to LMMs in the security. The Program was intended 
to strengthen market quality for BATS-listed ETPs. The Program, 
however, has not been adopted by issuers and market participants as 
readily as the Exchange had originally anticipated and there are 
currently no BATS-listed ETPs participating in the Program. The purpose 
of this filing is to eliminate such enhanced rebates and to make 
corresponding clarifying changes to the fee schedule. In coordination 
with this filing to eliminate the enhanced rebates for LMMs in LMM 
Securities, the Exchange has filed a separate filing to eliminate all 
annual listing fees for BATS-listed ETPs.\10\
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    \6\ See BATS Rule 11.5.
    \7\ As defined in Rule 11.8(e)(1)(C), LMM Security means an ETP 
that has an LMM.
    \8\ As defined in Rule 11.8(e)(1)(D), Minimum Performance 
Standards means a set of standards applicable to an LMM that may be 
determined from time to time by the Exchange.
    \9\ As defined in Rule 11.8(e)(1)(A), ETP means any security 
listed pursuant to Exchange Rule 14.11.
    \10\ See SR-BATS-2014-050, filed October 16, 2014, available at: 
http://www.batstrading.com/regulation/rule_filings/bzx/.
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    The Exchange proposes to modify its pricing for orders that add 
displayed liquidity in LMM Securities entered by LMMs that meet the 
Minimum Performance Standards (a ``Qualified LMM''). The Exchange is 
proposing to eliminate its existing tiered rebate structure that is 
based on the CADV of the LMM Security.\11\ Currently, unless an LMM 
otherwise qualifies for a higher rebate, a Qualified LMM shall receive 
the following rebates for each share of added displayed liquidity: 
where the CADV is 10,000 or less, $0.0070; where the CADV is between 
10,001 and 40,000, $0.0050; where the CADV is between 40,001 and 
80,000, $0.0045; where the CADV is between 80,001 and 150,000, $0.0040; 
and where the CADV is greater than 150,000, $0.0035. While not possible 
under the current pricing structure, in the event that a Qualified LMM 
is ever eligible to receive a higher per share rebate under non-LMM 
pricing, the Qualified LMM will receive such higher non-LMM rebate. As 
currently implemented, LMM rebates are not eligible for additional 
rebates like the NBBO Setter or NBBO Joiner rebates currently offered 
by the Exchange. The Exchange is proposing to eliminate enhanced 
rebates for Qualifying LMMs that add liquidity in LMM securities and 
instead apply the standard fees and rebates to all Members in all 
securities, including BATS-listed securities.
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    \11\ As defined in the proposed fee schedule, ``CADV'' means 
consolidated average daily volume calculated as the average daily 
volume reported for a security by all exchanges and trade reporting 
facilities to a consolidated transaction reporting plan for the 
three calendar months preceding the month for which the fees apply.
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    The Exchange is not proposing to make any other changes to its 
existing price structure. The Exchange is also not proposing to 
terminate operation of the Program. Thus, while LMMs will not receive 
enhanced rebates in BATS-listed ETPs, Market Makers may continue to 
register as LMMs in such BATS-listed ETPs in accordance with BATS Rule 
11.8(e).
Corresponding Changes
    Finally, the Exchange proposes to make several non-substantive 
changes to the fee schedule, including removal of the text of footnote 
3, which defines the term CADV, and reserving the footnote in order to 
maintain the current numbering of footnotes in the fee schedule.
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.\12\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) and 6(b)(5) of the

[[Page 64446]]

Act,\13\ 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 and it does 
not unfairly discriminate between customers, issuers, brokers or 
dealers. 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposal to eliminate LMM rebates is 
reasonable, equitable, and not unfairly discriminatory because it will 
result in standard fees and rebates being applied equally to all 
Members of the Exchange. Further, the potential decrease in rebates to 
LMMs in LMM Securities is reasonable, equitable, and not unfairly 
discriminatory because there are not currently any LMM Securities 
listed on the Exchange.
    The Exchange further believes that the proposal, especially when 
considered in conjunction with a separate proposal filed today that 
will eliminate annual listing fees for ETPs listed on the Exchange,\14\ 
will encourage the development of new financial products, provide a 
better trading environment for investors in ETPs, and generally 
encourage greater competition between listing venues by allowing the 
Exchange to provide issuers with a venue on which they are able to list 
ETPs without having to pay annual fees.
---------------------------------------------------------------------------

    \14\ See supra note 10.
---------------------------------------------------------------------------

    Based on the foregoing, the Exchange believes that the proposed 
amendments to the fee schedule 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 
and it does not unfairly discriminate between customers, issuers, 
brokers or dealers. Further, the Exchange believes that, combined with 
the amendment to eliminate annual listing fees, [sic] will enhance the 
Exchange's ability to compete as a listing venue in ETPs by allowing 
the Exchange to provide listing services without annual fees that it 
would otherwise not be able to provide if it continued to offer 
enhanced rebates. Accordingly, by allowing the Exchange to better 
compete as a listing venue, the Exchange believes that the proposal is 
designed 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. Further, the Exchange 
believes that the proposal will enhance the Exchange's program for 
listing securities on the Exchange, which will, in turn, provide 
issuers with another option for raising capital in the public markets, 
thereby promoting the principles discussed in Section 6(b)(5) of the 
Act.\15\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Corresponding Changes
    Finally, the Exchange believes that the clarifying change that 
deletes the text of footnote 3 and designates it as being reserved is 
reasonable as it will help to avoid confusion for those that review the 
Exchange's fee schedule. The Exchange notes that this proposed change 
is not designed to amend any fee or rebate, nor alter the manner in 
which it assesses fees or calculates rebates. The Exchange believes 
that the proposed amendment is intended to make the fee schedule 
clearer and less confusing for investors and eliminate potential 
investor confusion, thereby removing impediments to and perfecting the 
mechanism of a free and open market and a national market system, and, 
in general, protecting investors and the public interest.

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. The 
Exchange does not believe that the changes burden competition, but 
instead, enhance competition, as they are made in conjunction with the 
elimination of annual fees for ETPs listed on the Exchange,\16\ as 
described above, which the Exchange believes will increase the 
competitiveness of the Exchange's listings program. 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 [sic] deem fee structures to be unreasonable or 
excessive. As such, the proposal is a competitive proposal that is 
intended to enhance the Exchange's ability to compete as a listing 
venue for ETPs, which will, in turn, benefit the Exchange, ETP issuers, 
and all Exchange participants. In addition, the Exchange believes that 
the proposed non-substantive changes to the footnotes on the fee 
schedule would not affect intermarket nor intramarket competition 
because the changes do not alter any fees or rebates on the Exchange or 
the criteria associated therewith.
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    \16\ See supra note 10.
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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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
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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-2014-051 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-2014-051. 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

[[Page 64447]]

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 offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-BATS-2014-051, and should be submitted on or before 
November 19, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-25667 Filed 10-28-14; 8:45 am]
BILLING CODE 8011-01-P