Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees of BATS Exchange, Inc., 78932-78935 [2014-30592]

Download as PDF 78932 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices Exchange believes that extending the operation of the NMM Pilot will enhance competition among liquidity providers and thereby improve execution quality on the Exchange. The Exchange will continue to monitor the efficacy of the program during the proposed extended pilot period. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting the services it offers and the requirements it imposes to remain competitive with other U.S. equity exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 17 and Rule 19b–4(f)(6) 18 thereunder because the proposal does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) by its terms, become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest.19 A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 20 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay period so that the proposal may 17 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 19 In addition, Rule 19b–4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 20 17 CFR 240.19b–4(f)(6)(iii). mstockstill on DSK4VPTVN1PROD with NOTICES 18 17 VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 become operative before the pilot’s expiration. The Exchange stated that an immediate operative date is necessary in order to immediately implement the proposed rule change so that member organizations could continue to benefit from the pilot program without interruption after December 31, 2014. The Commission believes that waiver of the 30-day operative delay period is consistent with the protection of investors and the public interest. Specifically, the Commission believes that the proposal would allow the pilot to continue uninterrupted, thereby avoiding any potential investor confusion that could result from the temporary interruption in the pilot program. For these reasons, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, and designates the proposed rule change to be operative on December 31, 2014.21 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.22 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– NYSE–2014–71 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–NYSE–2014–71. 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 21 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 22 15 U.S.C. 78s(b)(3)(C). PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 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 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–NYSE– 2014–71 and should be submitted on or before January 21, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–30587 Filed 12–30–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73930; File No. SR–BATS– 2014–072] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees of BATS Exchange, Inc. December 23, 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 December 17, 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 23 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\31DEN1.SGM 31DEN1 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Interpretation and Policy .03 to Rule 11.8 entitled ‘‘Competitive Liquidity Provider Program for Exchange Traded Products,’’ in order to reduce the annual basic CLP Fee 3 for CLP Securities 4 and to allow for the allocation of the daily CLP Rebate 5 to a third ETP CLP 6 in certain CLP Securities. 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 mstockstill on DSK4VPTVN1PROD with NOTICES On August 30, 2011, the Exchange received approval of rules applicable to the qualification, listing and delisting of securities of issuers on the Exchange.7 More recently, the Exchange received approval to operate a pilot program that is designed to incentivize certain Market Makers 8 registered with the Exchange as CLPs to enhance liquidity on the 3 CLP Fee is defined in Interpretation and Policy .03(a) to BATS Rule 11.8. 4 CLP Security is defined in Interpretation and Policy .03(b)(3) to BATS Rule 11.8. 5 CLP Rebate is defined in Interpretation and Policy .03(a) to BATS Rule 11.8. 6 ETP CLP is defined in Interpretation and Policy .03(b)(1) to BATS Rule 11.8. 7 See Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 2011) (SR–BATS–2011–018). 8 As defined in BATS Rules, the term ‘‘Market Maker’’ means a Member that acts a as a market maker pursuant to Chapter XI of BATS Rules. VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 Exchange in certain ETPs 9 listed on the Exchange and thereby qualify to receive part of a daily rebate (the ‘‘CLP Program’’) under Interpretation and Policy .03 to Rule 11.8.10 Currently, under the CLP Program, a Sponsor 11 may pay an annual basic fee of $10,000 (a ‘‘Basic CLP Fee’’) and a supplemental fee, which, combined with the Basic Fee shall not exceed $100,000 (a ‘‘Supplemental CLP Fee,’’ or, when combined with the Basic CLP Fee, the ‘‘CLP Fees’’), in order for the CLP Company,12 on behalf of a CLP Security, to participate in the CLP Program. Such CLP Fees are credited to the BATS General Fund. The Exchange then pays the CLP Rebate out of the BATS General Fund in order to incentivize CLPs in the CLP Security to quote aggressively in the CLP Security by providing a CLP Rebate to one or more CLPs that make a quality market in the CLP Security pursuant to the Program.13 The Exchange currently allocates the daily CLP Rebates to Eligible ETP CLPs 14 as follows: (i) The ETP CLPs with the highest and second highest number of Bid SET Credits 15 will receive 60% and 40%, respectively, of half of the daily CLP Rebate for the CLP Security; and (ii) the ETP CLPs with the highest and second highest number of Offer SET Credits 16 will receive 60% and 40%, respectively, of half of the daily CLP Rebate for the CLP Security. Where there is only one Eligible ETP CLP for the bid or offer portion of the CLP Rebate, 100% of that half of the rebate will be provided to such ETP CLP. The Exchange is proposing to make two changes to the CLP Program in this 9 ETP is defined in Interpretation and Policy .03(b)(4) to Rule 11.8. 10 See Securities Exchange Act Release No. 72692 (July 28, 2014), 79 FR 44908 (August 1, 2014) (SR– BATS–2014–022). 11 Sponsor is defined in Interpretation and Policy .03(b)(5) to Rule 11.8. 12 CLP Company is defined in Interpretation and Policy .03(b)(2) to Rule 11.8. 13 The standards for a quality market include, for example, posting at least five round lots in a CLP Security at the NBB or NBO at the time of a SET in order to have a Winning Bid SET or Winning Offer SET, respectively, as well as requiring that a CLP is quoting at least a round lot at a price at or within 1.2% of the CLP’s bid (offer) at the time of the SET in order to have a Winning Bid (Offer) Set. The two CLPs that have the most Winning Bid SETs and the two Eligible CLPs with the most Winning Offer SETs in a given CLP Security will split the CLP Credit on a pro-rata basis. See Interpretation and Policy .03(i) to Rule 11.8. 14 Eligible ETP CLP is defined in Interpretation and Policy .03(i)(1)(A) to Rule 11.8. 15 Bid SET Credits is defined in Interpretation and Policy .03(i)(1) to Rule 11.8. 16 Offer SET Credits is defined in Interpretation and Policy .03(i)(1) to Rule 11.8. PO 00000 Frm 00155 Fmt 4703 Sfmt 4703 78933 filing. First, the Exchange is proposing to amend Interpretation and Policy .03(d)(2)(A) in order to reduce the Basic CLP Fee from $10,000 to $5,000. The Exchange is proposing to lower the Basic CLP Fee to $5,000 in order to allow ETP issuers to participate in the CLP Program for the same price that they are able to participate in the lead market maker program on NYSE Arca, Inc. (‘‘Arca’’).17 Second, the Exchange is proposing to amend Interpretation and Policy .03(m)(1) in order to adjust the allocation of the daily CLP Rebate where the CLP Fees are equal to or greater than $40,000. Specifically, the Exchange is proposing to allocate the daily CLP Rebates to Eligible ETP CLPs as follows: For CLP Securities in which the CLP Fees are equal to or greater than $40,000, the ETP CLPs with the highest, second highest, and third highest number of Bid (Offer) SET Credits will receive 50%, 30%, and 20%, respectively, of half of the daily CLP Rebate for the CLP Security; where there are only two Eligible ETP CLPs, the ETP CLPs with the highest and second highest number of Bid (Offer) SET Credits will receive 60% and 40%, respectively, of half of the daily CLP Rebate for the CLP Security. The Exchange is not proposing to change the current allocation for CLP Securities where the CLP Fees are less than $40,000. The Exchange is also not proposing to amend the existing allocation where a single ETP CLP will receive 100% of the bid or offer portion of the CLP Rebate where that ETP CLP is the only Eligible ETP CLP. The Exchange notes that no ETPs listed on the Exchange have CLP Fees equal to or greater than $40,000. The Exchange is also proposing to make a corresponding non-substantive change to Interpretation and Policy .03(m)(1) to Rule 11.8 in order to move the current ‘‘**’’ which refers readers to the definition of Size Event Tests to the first reference to Size Event Tests, which is included in the new language regarding the allocation of CLP Rebates in CLP Securities in which the CLP Fees are equal to or greater than $40,000. 2. Statutory Basis The Exchange believes that its proposal 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 17 See Securities Exchange Act Release No. 61330 (January 12 2010), 75 FR 2896 (January 19, 2010) (SR–NYSEArca–2009–106). Listing fees for ETPs eligible to participate in the lead market maker program start at $5,000 annually. E:\FR\FM\31DEN1.SGM 31DEN1 mstockstill on DSK4VPTVN1PROD with NOTICES 78934 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices requirements of section 6(b) of the Act.18 In particular, the proposal is consistent with section 6(b)(4) and 6(b)(5) of the Act,19 because it would provide for the equitable allocation of reasonable dues, fees, and other charges among Members and issuers and other persons using any facility or system which the Exchange operates or controls, and it is designed to promote just and equitable principles of trade, 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. The goal of the CLP Program is to incentivize Members to make highquality, liquid markets, which supports the primary goal of the Act to promote the development of a resilient and efficient national market system. Along with furthering these goals, reducing the Basic CLP Fee to $5,000 is reasonable, equitable, and not unfairly discriminatory because it will be applied equally to all issuers of ETPs and will lower the financial burden for such ETPs to participate in and reap the benefits of the CLP Program. As noted above, $5,000 is also the minimum listing fee for ETPs listed on Arca to participate in the Arca lead market maker program. By aligning the pricing for the CLP Program with that of Arca, the Exchange believes that it will provide a better trading environment for investors and ETPs, and generally encourage greater competition between listing venues by allowing the Exchange to provide a program designed to enhance liquidity and market quality for the same price as a comparable program on Arca. The Exchange also believes that allocating CLP Rebates among three ETP CLPs instead of two where the CLP Fees are equal to or greater than $40,000 will enhance quote competition, improve liquidity on the Exchange, support the quality of price discovery, promote market transparency, and increase competition for listings and trade executions, while reducing spreads and transaction costs in such securities. Maintaining and increasing liquidity in Exchange-listed securities will help raise investors’ confidence in the fairness of the market and their transactions. Applying such allocation only to CLP Securities with CLP Fees greater than $40,000 is reasonable, equitable, and not unfairly discriminatory because the Exchange has determined, in consultation with issuers and Market Makers, that $40,000 18 15 19 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 is an appropriate level at which adding a third ETP CLP and reducing the percentage of the daily CLP Rebates allocated to the first and second ETP CLPs by 10% each would not be excessively dilutive while still providing a meaningful incentive for the third ETP CLP. As noted above, there are currently no ETPs with CLP Fees greater than $40,000, meaning that the proposed change would not represent a change to any ETPs currently listed on the Exchange. Finally, the Exchange believes that the corresponding non-substantive change is reasonable as it will help to avoid confusion for those that review the Exchange’s rules. The Exchange notes that this proposed change is not designed to amend any fees or rebates, nor alter the manner in which it assesses fees or calculates rebates. The Exchange believes that the proposed amendment is intended to make the Exchange’s rules more clear and less confusing for potential 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. To the contrary, the Exchange believes that the proposal will increase competition in both the listings market and in competition for market makers. The proposed reduction of the Basic CLP Fee will promote competition in the listings market by lowering the cost of participation in the CLP Program. Further, $5,000 is the same annual base fee that Arca charges listed ETPs that are participating in the Arca lead market maker program. As such, lowering the Basic CLP Fee to $5,000 will better enable the Exchange to compete as a listing venue. The Exchange also believes that the proposed changes will enhance competition among participants by creating incentives for more market makers to compete to make better quality markets. By allowing an additional ETP CLP to receive a portion of the daily CLP Rebates where CLP Fees equal or exceed $40,000, the Exchange believes that competition for the CLP Rebates will be enhanced, Market Makers will be further incentivized to become an ETP CLP, and the quality of quotes on the Exchange PO 00000 Frm 00156 Fmt 4703 Sfmt 4703 will improve. This, in turn, will attract more liquidity to the Exchange and further improve the quality of trading in CLP Securities, which will also act to bolster the Exchange’s listing business. Additionally, the Exchange believes that the proposed non-substantive change 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 20 and paragraph (f) of Rule 19b–4 thereunder.21 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–2014–072 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–2014–072. 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 20 15 21 17 E:\FR\FM\31DEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 31DEN1 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices 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 at 100 F Street NE., Washington, DC 20549–1090 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal 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– 2014–072, and should be submitted on or before January 21, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Brent J. Fields, Secretary. [FR Doc. 2014–30592 Filed 12–30–14; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice: 8989] mstockstill on DSK4VPTVN1PROD with NOTICES Notice of Meeting of the International Telecommunication Advisory Committee and Preparations for Upcoming International Telecommunications Meetings This notice announces a meeting of the Department of State’s International Telecommunication advisory Committee (ITAC) to review the activities of the Department of State in international meetings on international communications and information policy over the last quarter and prepare for similar activities in the next quarter. The ITAC will meet on January 22, 2015 at 2:00 p.m. EST at: 1300 I Street NW., (suite 400), Washington, DC, 20005 to provide an update on committee membership (see FR 2014–28411); review the preparations for and outcomes of international 22 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 22:02 Dec 30, 2014 Jkt 235001 telecommunications meetings of the International Telecommunication Union (ITU), the Inter-American Telecommunications Commission, Organization for Economic Cooperation and Development, and Asia Pacific, and announce preparations for similar activities. In particular, preparations for the ITU Conference Preparatory Meeting (CPM) for the 2015 World Radiocommunication Conference will be highlighted. Attendance at this meeting is open to the public as seating capacity allows. The public will have an opportunity to provide comments at this meeting at the invitation of the chair. Further details on this ITAC meeting will be announced on the Department of State’s email list, ITAC@lmlist.state.gov. Use of the ITAC list is limited to meeting announcements and confirmations, distribution of agendas and other relevant meeting documents. The Department welcomes any U.S. citizen or legal permanent resident to remain on or join the ITAC listserv by providing his or her name, email address, and the company, organization, or community that he or she is representing, if any. Persons wishing to request reasonable accommodation during the meeting should contact jacksonln@state.gov or gadsdensf@state.gov not later than January 15, 2015. Requests made after that time will be considered, but might not be able to be fulfilled. FOR FURTHER INFORMATION CONTACT: Please contact Franz Zichy at 202–647– 5778, zichyfj@state.gov. Dated: December 23, 2014. Julie N. Zoller, Senior Deputy Coordinator, International Communications and Information Policy, U.S. State Department. [FR Doc. 2014–30713 Filed 12–30–14; 8:45 am] BILLING CODE 4710–07–P DEPARTMENT OF STATE [Public Notice 8988] Shipping Coordinating Committee; Notice of Committee Meeting The Shipping Coordinating Committee (SHC) will conduct an open meeting at 9:30 a.m. on Tuesday January 20, 2015, in Room 8 of the DOT Conference Center which is in the West building, 1200 New Jersey Ave. SE., Washington, DC 20590. The primary purpose of the meeting is to prepare for the second Session of the International Maritime Organization’s (IMO) SubCommittee on Human Element, Training and Watchkeeping (HTW) to be held at PO 00000 Frm 00157 Fmt 4703 Sfmt 4703 78935 the IMO Headquarters, United Kingdom, February 2–06, 2015. The agenda items to be considered include: —Decisions of other IMO bodies —Validated model training courses —Reports on unlawful practices associated with certificates of competency — Revised guidelines for model course development, updating and validation processes —Guidance for the implementation of the 2010 Manila Amendments —Follow–up action to the STCW–F Conference resolutions 6 and 7 —Role of the human element —Development of guidance for personnel involved with tug-barge operations —Revision of guidance for model course development, updating and validation processes —Mandatory Code for ships operating in polar waters —Review of STCW passenger ship specific safety training —Training in hot work procedures on crude oil tankers —First outline of the detailed review of the Global Maritime Distress and Safety System (GMDSS) —E–navigation strategy implementation plan —Guidelines for shipowners and seafarers for implementation of relevant IMO instruments in relation to the carriage of dangerous goods in packaged form by sea —Non-mandatory instrument on regulations for non-convention ships Members of the public may attend this meeting up to the seating capacity of the room. To facilitate the building security process, and to request reasonable accommodation, those who plan to attend should contact the meeting coordinator, Mr. Davis J. Breyer, by email at davis.j.breyer@ uscg.mil, by phone at (202) 372–1445, by fax at (202) 372–8283, or in writing at Commandant (CG–OES–1), U.S. Coast Guard Stop 7509, 2703 Martin Luther King Jr. Ave. SE., Washington, DC 20593–7509 not later than January 9, 2015, 11 days prior to the meeting. Requests made after January 9, 2015 might not be able to be accommodated. Please note that due to security considerations, two valid, government issued photo identifications must be presented to gain entrance to the DOT Conference Center. The DOT Conference Center is accessible by taxi and privately owned conveyance (public transportation is not generally available). However, parking in the vicinity of the building is extremely E:\FR\FM\31DEN1.SGM 31DEN1

Agencies

[Federal Register Volume 79, Number 250 (Wednesday, December 31, 2014)]
[Notices]
[Pages 78932-78935]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30592]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73930; File No. SR-BATS-2014-072]


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

December 23, 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 December 17, 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

[[Page 78933]]

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.
---------------------------------------------------------------------------

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

    The Exchange filed a proposal to amend Interpretation and Policy 
.03 to Rule 11.8 entitled ``Competitive Liquidity Provider Program for 
Exchange Traded Products,'' in order to reduce the annual basic CLP Fee 
\3\ for CLP Securities \4\ and to allow for the allocation of the daily 
CLP Rebate \5\ to a third ETP CLP \6\ in certain CLP Securities.
---------------------------------------------------------------------------

    \3\ CLP Fee is defined in Interpretation and Policy .03(a) to 
BATS Rule 11.8.
    \4\ CLP Security is defined in Interpretation and Policy 
.03(b)(3) to BATS Rule 11.8.
    \5\ CLP Rebate is defined in Interpretation and Policy .03(a) to 
BATS Rule 11.8.
    \6\ ETP CLP is defined in Interpretation and Policy .03(b)(1) to 
BATS Rule 11.8.
---------------------------------------------------------------------------

    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 August 30, 2011, the Exchange received approval of rules 
applicable to the qualification, listing and delisting of securities of 
issuers on the Exchange.\7\ More recently, the Exchange received 
approval to operate a pilot program that is designed to incentivize 
certain Market Makers \8\ registered with the Exchange as CLPs to 
enhance liquidity on the Exchange in certain ETPs \9\ listed on the 
Exchange and thereby qualify to receive part of a daily rebate (the 
``CLP Program'') under Interpretation and Policy .03 to Rule 11.8.\10\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 65225 (August 30, 
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
    \8\ As defined in BATS Rules, the term ``Market Maker'' means a 
Member that acts a as a market maker pursuant to Chapter XI of BATS 
Rules.
    \9\ ETP is defined in Interpretation and Policy .03(b)(4) to 
Rule 11.8.
    \10\ See Securities Exchange Act Release No. 72692 (July 28, 
2014), 79 FR 44908 (August 1, 2014) (SR-BATS-2014-022).
---------------------------------------------------------------------------

    Currently, under the CLP Program, a Sponsor \11\ may pay an annual 
basic fee of $10,000 (a ``Basic CLP Fee'') and a supplemental fee, 
which, combined with the Basic Fee shall not exceed $100,000 (a 
``Supplemental CLP Fee,'' or, when combined with the Basic CLP Fee, the 
``CLP Fees''), in order for the CLP Company,\12\ on behalf of a CLP 
Security, to participate in the CLP Program. Such CLP Fees are credited 
to the BATS General Fund. The Exchange then pays the CLP Rebate out of 
the BATS General Fund in order to incentivize CLPs in the CLP Security 
to quote aggressively in the CLP Security by providing a CLP Rebate to 
one or more CLPs that make a quality market in the CLP Security 
pursuant to the Program.\13\
---------------------------------------------------------------------------

    \11\ Sponsor is defined in Interpretation and Policy .03(b)(5) 
to Rule 11.8.
    \12\ CLP Company is defined in Interpretation and Policy 
.03(b)(2) to Rule 11.8.
    \13\ The standards for a quality market include, for example, 
posting at least five round lots in a CLP Security at the NBB or NBO 
at the time of a SET in order to have a Winning Bid SET or Winning 
Offer SET, respectively, as well as requiring that a CLP is quoting 
at least a round lot at a price at or within 1.2% of the CLP's bid 
(offer) at the time of the SET in order to have a Winning Bid 
(Offer) Set. The two CLPs that have the most Winning Bid SETs and 
the two Eligible CLPs with the most Winning Offer SETs in a given 
CLP Security will split the CLP Credit on a pro-rata basis. See 
Interpretation and Policy .03(i) to Rule 11.8.
---------------------------------------------------------------------------

    The Exchange currently allocates the daily CLP Rebates to Eligible 
ETP CLPs \14\ as follows: (i) The ETP CLPs with the highest and second 
highest number of Bid SET Credits \15\ will receive 60% and 40%, 
respectively, of half of the daily CLP Rebate for the CLP Security; and 
(ii) the ETP CLPs with the highest and second highest number of Offer 
SET Credits \16\ will receive 60% and 40%, respectively, of half of the 
daily CLP Rebate for the CLP Security. Where there is only one Eligible 
ETP CLP for the bid or offer portion of the CLP Rebate, 100% of that 
half of the rebate will be provided to such ETP CLP.
---------------------------------------------------------------------------

    \14\ Eligible ETP CLP is defined in Interpretation and Policy 
.03(i)(1)(A) to Rule 11.8.
    \15\ Bid SET Credits is defined in Interpretation and Policy 
.03(i)(1) to Rule 11.8.
    \16\ Offer SET Credits is defined in Interpretation and Policy 
.03(i)(1) to Rule 11.8.
---------------------------------------------------------------------------

    The Exchange is proposing to make two changes to the CLP Program in 
this filing. First, the Exchange is proposing to amend Interpretation 
and Policy .03(d)(2)(A) in order to reduce the Basic CLP Fee from 
$10,000 to $5,000. The Exchange is proposing to lower the Basic CLP Fee 
to $5,000 in order to allow ETP issuers to participate in the CLP 
Program for the same price that they are able to participate in the 
lead market maker program on NYSE Arca, Inc. (``Arca'').\17\
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release No. 61330 (January 12 
2010), 75 FR 2896 (January 19, 2010) (SR-NYSEArca-2009-106). Listing 
fees for ETPs eligible to participate in the lead market maker 
program start at $5,000 annually.
---------------------------------------------------------------------------

    Second, the Exchange is proposing to amend Interpretation and 
Policy .03(m)(1) in order to adjust the allocation of the daily CLP 
Rebate where the CLP Fees are equal to or greater than $40,000. 
Specifically, the Exchange is proposing to allocate the daily CLP 
Rebates to Eligible ETP CLPs as follows: For CLP Securities in which 
the CLP Fees are equal to or greater than $40,000, the ETP CLPs with 
the highest, second highest, and third highest number of Bid (Offer) 
SET Credits will receive 50%, 30%, and 20%, respectively, of half of 
the daily CLP Rebate for the CLP Security; where there are only two 
Eligible ETP CLPs, the ETP CLPs with the highest and second highest 
number of Bid (Offer) SET Credits will receive 60% and 40%, 
respectively, of half of the daily CLP Rebate for the CLP Security. The 
Exchange is not proposing to change the current allocation for CLP 
Securities where the CLP Fees are less than $40,000. The Exchange is 
also not proposing to amend the existing allocation where a single ETP 
CLP will receive 100% of the bid or offer portion of the CLP Rebate 
where that ETP CLP is the only Eligible ETP CLP. The Exchange notes 
that no ETPs listed on the Exchange have CLP Fees equal to or greater 
than $40,000.
    The Exchange is also proposing to make a corresponding non-
substantive change to Interpretation and Policy .03(m)(1) to Rule 11.8 
in order to move the current ``**'' which refers readers to the 
definition of Size Event Tests to the first reference to Size Event 
Tests, which is included in the new language regarding the allocation 
of CLP Rebates in CLP Securities in which the CLP Fees are equal to or 
greater than $40,000.
2. Statutory Basis
    The Exchange believes that its proposal 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

[[Page 78934]]

requirements of section 6(b) of the Act.\18\ In particular, the 
proposal is consistent with section 6(b)(4) and 6(b)(5) of the Act,\19\ 
because it would provide for the equitable allocation of reasonable 
dues, fees, and other charges among Members and issuers and other 
persons using any facility or system which the Exchange operates or 
controls, and it is designed to promote just and equitable principles 
of trade, 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The goal of the CLP Program is to incentivize Members to make high-
quality, liquid markets, which supports the primary goal of the Act to 
promote the development of a resilient and efficient national market 
system. Along with furthering these goals, reducing the Basic CLP Fee 
to $5,000 is reasonable, equitable, and not unfairly discriminatory 
because it will be applied equally to all issuers of ETPs and will 
lower the financial burden for such ETPs to participate in and reap the 
benefits of the CLP Program. As noted above, $5,000 is also the minimum 
listing fee for ETPs listed on Arca to participate in the Arca lead 
market maker program. By aligning the pricing for the CLP Program with 
that of Arca, the Exchange believes that it will provide a better 
trading environment for investors and ETPs, and generally encourage 
greater competition between listing venues by allowing the Exchange to 
provide a program designed to enhance liquidity and market quality for 
the same price as a comparable program on Arca.
    The Exchange also believes that allocating CLP Rebates among three 
ETP CLPs instead of two where the CLP Fees are equal to or greater than 
$40,000 will enhance quote competition, improve liquidity on the 
Exchange, support the quality of price discovery, promote market 
transparency, and increase competition for listings and trade 
executions, while reducing spreads and transaction costs in such 
securities. Maintaining and increasing liquidity in Exchange-listed 
securities will help raise investors' confidence in the fairness of the 
market and their transactions. Applying such allocation only to CLP 
Securities with CLP Fees greater than $40,000 is reasonable, equitable, 
and not unfairly discriminatory because the Exchange has determined, in 
consultation with issuers and Market Makers, that $40,000 is an 
appropriate level at which adding a third ETP CLP and reducing the 
percentage of the daily CLP Rebates allocated to the first and second 
ETP CLPs by 10% each would not be excessively dilutive while still 
providing a meaningful incentive for the third ETP CLP. As noted above, 
there are currently no ETPs with CLP Fees greater than $40,000, meaning 
that the proposed change would not represent a change to any ETPs 
currently listed on the Exchange.
    Finally, the Exchange believes that the corresponding non-
substantive change is reasonable as it will help to avoid confusion for 
those that review the Exchange's rules. The Exchange notes that this 
proposed change is not designed to amend any fees or rebates, nor alter 
the manner in which it assesses fees or calculates rebates. The 
Exchange believes that the proposed amendment is intended to make the 
Exchange's rules more clear and less confusing for potential 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. To 
the contrary, the Exchange believes that the proposal will increase 
competition in both the listings market and in competition for market 
makers. The proposed reduction of the Basic CLP Fee will promote 
competition in the listings market by lowering the cost of 
participation in the CLP Program. Further, $5,000 is the same annual 
base fee that Arca charges listed ETPs that are participating in the 
Arca lead market maker program. As such, lowering the Basic CLP Fee to 
$5,000 will better enable the Exchange to compete as a listing venue.
    The Exchange also believes that the proposed changes will enhance 
competition among participants by creating incentives for more market 
makers to compete to make better quality markets. By allowing an 
additional ETP CLP to receive a portion of the daily CLP Rebates where 
CLP Fees equal or exceed $40,000, the Exchange believes that 
competition for the CLP Rebates will be enhanced, Market Makers will be 
further incentivized to become an ETP CLP, and the quality of quotes on 
the Exchange will improve. This, in turn, will attract more liquidity 
to the Exchange and further improve the quality of trading in CLP 
Securities, which will also act to bolster the Exchange's listing 
business.
    Additionally, the Exchange believes that the proposed non-
substantive change 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.

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

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

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \20\ and paragraph (f) of Rule 19b-4 
thereunder.\21\ 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.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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-2014-072 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-2014-072. 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

[[Page 78935]]

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 at 100 F Street NE., Washington, DC 20549-1090 on 
official business days between the hours of 10:00 a.m. and 3:00 p.m. 
Copies of such filing also will be available for inspection and copying 
at the principal 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-2014-072, and should be submitted 
on or before January 21, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2014-30592 Filed 12-30-14; 8:45 am]
BILLING CODE 8011-01-P