Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish Fees for the BATS One Feed, and Amend Fees for BYX Top and BYX Last Sale, 9792-9801 [2015-03655]
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Federal Register / Vol. 80, No. 36 / Tuesday, February 24, 2015 / Notices
the ISG, from other exchanges who are
members or affiliates of the ISG, or with
which the Exchange has entered into a
comprehensive surveillance sharing
agreement. In addition, the Exchange is
able to access, as needed, trade
information for certain fixed income
instruments reported to Financial
Industry Reporting Authority’s
(‘‘FINRA’’) Trade Reporting and
Compliance Engine (‘‘TRACE’’).46
The Exchange represents that the
Exchange deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to the Exchange’s
existing rules governing the trading of
equity securities.47 In support of this
proposal, the Exchange has made
representations, including:
(1) The Shares will be subject to
BATS Rule 14.11(i), which sets forth the
initial and continued listing criteria
applicable to Managed Fund Shares.
(2) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.
(3) Trading of the Shares through the
Exchange will be subject to the
Exchange’s surveillance procedures for
derivative products, including Managed
Fund Shares, which are adequate to
properly monitor the trading of the
Shares on the Exchange during all
trading sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
(4) Prior to the commencement of
trading, the Exchange will inform its
members in an Information Circular of
the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Circular
will discuss the following: (a) The
procedures for purchases and
redemptions of Shares in creation units
(and that Shares are not individually
redeemable); (b) BATS Rule 3.7, which
imposes suitability obligations on
Exchange members with respect to
recommending transactions in the
Shares to customers; (c) how
information regarding the Intraday
Indicative Value and the Disclosed
Portfolio is disseminated; (d) the risks
involved in trading the Shares during
the Pre-Opening and After Hours
Trading Sessions when an updated
Intraday Indicative Value will not be
calculated or publicly disseminated; (e)
the requirement that members deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; and (f) trading information.
(5) For initial and continued listing,
the Fund must be in compliance with
Rule 10A–3 under the Exchange Act.48
(6) A minimum of 100,000 Shares will
be outstanding at the commencement of
trading on the Exchange.
(7) The Fund will invest at least 80%
of its assets, under normal market
conditions, in U.S. dollar-denominated
investment-grade and high-yield FixedIncome Securities, futures, and swaps.
(8) Derivatives investments held by
the Fund will be exchange traded and/
or centrally cleared, and they will be
collateralized.
(9) The Fund will generally invest in
corporate bond issuances that have at
least $250 million par amount
outstanding.
(10) The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid assets (calculated at
the time of investment); will monitor its
portfolio liquidity on an ongoing basis
to determine whether, in light of current
circumstances, an adequate level of
liquidity is being maintained; and will
consider taking appropriate steps in
order to maintain adequate liquidity if,
through a change in values, net assets,
or other circumstances, more than 15%
of the Fund’s net assets are held in
illiquid assets.
(11) All of the exchange listed
investment company securities and
futures that the Fund will invest in will
trade on markets that are members of
ISG or with which the Exchange has in
place a comprehensive surveillance
sharing agreement.
(12) The Fund will not invest in nonU.S. equity securities.
(13) The Fund’s investments will be
consistent with the Fund’s investment
objective and will not be used to
achieve leveraged or inverse leveraged
returns (i.e. two times or three times the
Fund’s benchmark).
This approval order is based on all of
the Exchange’s representations and
description of the Fund, including those
set forth above and in the Notice, and
the Exchange’s description of the Fund.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1 thereto, is consistent with Section
6(b)(5) of the Act 49 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,50 that the
proposed rule change (SR–BATS–2014–
Notice, supra note 3, 80 FR at 591.
47 See id. at 590.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.51
Brent J. Fields,
Secretary.
[FR Doc. 2015–03666 Filed 2–23–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74284; File No. SR–BYX–
2015–09]
Regulatory Organizations; BATS YExchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Establish Fees for the
BATS One Feed, and Amend Fees for
BYX Top and BYX Last Sale
February 18, 2015.
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 February
3, 2015, BATS Y-Exchange, Inc. (‘‘BYX’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the 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 Act3 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 its fee schedule to establish fees
for the BATS One Feed, amend fees for
BYX Top and BYX Last Sale, add
definitions for terms that apply to
market data fees, and make certain
technical, non-substantive changes.
The text of the proposed rule change
is available at the Exchange’s Web site
at https://www.batstrading.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
51 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
48 17
46 See
056), as modified by Amendment No. 1
thereto, be, and it hereby is, approved.
CFR 240.10A–3.
U.S.C. 78f(b)(5).
50 15 U.S.C. 78s(b)(2).
49 15
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Federal Register / Vol. 80, No. 36 / Tuesday, February 24, 2015 / 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 those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
fee schedule to establish fees for the
BATS One Feed, amend fees for BYX
Top and BYX Last Sale, add definitions
for terms that apply to market data fees,
and make certain technical, nonsubstantive changes.
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Technical, Non-Substantive Changes
The Exchange proposes the following
technical, non-substantive amendments
to its fee schedule regarding its existing
market data fees. The Exchange
proposes to rename the section entitled
‘‘BYX Exchange PITCH Feed’’ as the
‘‘BYX Depth’’, ‘‘BYX Exchange Top
Feed’’ as ‘‘BYX Top’’, ‘‘BYX Exchange
Last Sale Feed’’ as ‘‘BYX Last Sale’’,
‘‘BYX Exchange Historical TOP’’ as
‘‘BYX Historical Top’’, and ‘‘Historical
PITCH’’ as ‘‘Historical Depth.’’ The
Exchange does not propose to amend
the content of these market data
products; nor does the Exchange
propose to amend the fees for these
products, other than for BYX Top and
BYX Last Sale as described below.
Definitions Applicable to Market Data
Fees
The Exchange proposes to include in
its fee schedule the following defined
terms that relate to the Exchange’s
market data fees. The proposed
definitions are designed to provide
greater transparency with regard to how
the Exchange assesses fees for market
data. The Exchange notes that none of
the proposed definitions are designed to
amend any fee, nor alter the manner in
which it assesses fees.
First, the Exchange proposes to define
a ‘‘Distributor’’ as ‘‘any entity that
receives an Exchange Market Data
product directly from the Exchange or
indirectly through another entity and
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then distributes it internally or
externally to a third party.’’ 5 In turn, an
Internal Distributor and External
Distributor will be separately defined.
An Internal Distributor will be defined
as a ‘‘Distributor that receives the
Exchange Market Data product and then
distributes that data to one or more
Users within the Distributor’s own
entity.’’ 6 An External Distributor will be
defined as a ‘‘Distributor that receives
the Exchange Market Data product and
then distributes that data to a third party
or one or more Users outside the
Distributor’s own entity.’’ 7
Secondly, the Exchange proposes to
add a definition of ‘‘User’’ to its fee
schedule. A User will be defined as a
‘‘natural person, a proprietorship,
corporation, partnership, or entity, or
device (computer or other automated
service), that is entitled to receive
Exchange data.’’ For purposes of its
market data fees, the Exchange will
distinguish between ‘‘Non-Professional
Users’’ and ‘‘Professional Users.’’
Specifically, a Non-Professional User
will be defined as ‘‘a natural person
who is not: (i) Registered or qualified in
any capacity with the Commission, the
Commodity Futures Trading
Commission, any state securities
agency, any securities exchange or
association; any commodities or futures
contract market or association; (ii)
engaged as an ‘‘investment adviser’’ as
that term is defined in Section 201(11)
of the Investment Advisers Act of 1940
(whether or not registered or qualified
under that Act); or (iii) employed by a
bank or other organization exempt from
registration under federal or state
securities laws to perform functions that
will require registration or qualification
if such functions were performed for an
organization not so exempt.’’ 8 A
Professional User will be defined as
‘‘any User other than a Non-Professional
User.’’ 9
require an External Distributor of BYX
Last Sale or BYX Top to count, classify
(e.g., professional or non-professional)
or report to the Exchange information
regarding the customers to which they
provide the data. Instead, the Exchange
currently charges an External
Distributor of BYX Last Sale a flat fee of
$2,500 per month. The Exchange also
currently separately charges an External
Distributor of BYX Top a flat fee of
$2,500 per month. End Users do not pay
the Exchange for BYX Last Sale or BYX
Top, nor are end Users required to enter
into contracts with the Exchange.
The Exchange proposes to decrease
the External Distributor Fee for BYX
Top and BYX Last Sale from $2,500 to
$1,250 per month.10 The Exchange also
proposes to now allow subscribers to
either BYX Top or BYX Last Sale to also
receive, upon request and at no
additional cost, BYX Last Sale or BYX
Top, as applicable. The Exchange also
proposes to establish a New External
Distributor Credit under which new
External Distributors of BYX Top or
BYX Last Sale will not be charged a
Distributor Fee for their first three (3)
months. The Exchange believes that the
proposed pricing model is simple and
easy for data recipients to comply with,
and thus, will continue to result in a
minimal additional administrative
burden for data recipients who elect to
receive both BYX Last Sale and BYX
Top at no additional cost and at the
decreased External Distribution fees.
BYX Top and BYX Last Sale
10 End Users will continue to not pay the
Exchange for BYX Last Sale or BYX Top, nor will
end Users be required to enter into contracts with
the Exchange.
11 See Securities Exchange Act Release No. 73918
(December 23, 2014), 79 FR 78920 (December 31,
2014) (File Nos. SR–EDGX–2014–25; SR–EDGA–
2014–25; SR–BATS–2014–055; SR–BYX–2014–030)
(Notice of Amendments No. 2 and Order Granting
Accelerated Approval to Proposed Rule Changes, as
Modified by Amendments Nos. 1 and 2, to Establish
a New Market Data Product called the BATS One
Feed) (‘‘BATS One Approval Order’’).
12 The Exchange’s affiliated exchanges are EDGA
Exchange, Inc. (‘‘EDGA’’), EDGX Exchange, Inc.
(‘‘EDGX’’), and BATS Exchange, Inc. (‘‘BZX’’,
together with EDGX, BZX, and BYX, the ‘‘BATS
Exchanges’’). On January 23, 2014, BATS Global
Markets, Inc. (‘‘BGMI’’), the former parent company
of the Exchange and BYX, completed its business
combination with Direct Edge Holdings LLC, the
parent company of EDGA and EDGX. See Securities
The cost of BYX Last Sale for an
Internal Distributor is $500 per month.
Likewise, the cost of BYX Top for an
Internal Distributor is $500 per month.
The Exchange does not charge per User
fees for either BYX Last Sale or BYX
Top. Therefore, the Exchange does not
5 The proposed definition of ‘‘Distributor’’ is
similar to Nasdaq Rule 7047(d)(1).
6 The proposed definition of ‘‘Internal
Distributor’’ is similar to Nasdaq Rule
7047(d)(1)(A).
7 The proposed definition of ‘‘External
Distributor’’ is similar to Nasdaq Rule 7047(d)(1)(B).
8 The proposed definition of ‘‘Professional User’’
is similar to Nasdaq Rule 7047(d)(3)(A).
9 The proposed definition of ‘‘Non-Professional
User’’ is similar to Nasdaq Rule 7047(d)(3)(B).
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BATS One Feed
The Commission recently approved a
proposed rule change by the Exchange
to establish a new market data product
called the BATS One Feed.11 The BATS
One Feed is a data feed that
disseminates, on a real-time basis, the
aggregate best bid and offer (‘‘BBO’’) of
all displayed orders for securities traded
on BYX and its affiliated exchanges 12
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and for which the BATS Exchanges
report quotes under the Consolidated
Tape Association (‘‘CTA’’) Plan or the
Nasdaq/UTP Plan.13 The BATS One
Feed also contains the individual last
sale information for the BATS
Exchanges (collectively with the
aggregate BBO, the ‘‘BATS One
Summary Feed’’). In addition, the BATS
One Feed contains optional
functionality which will enable
recipients to elect to receive aggregated
two-sided quotations from the BATS
Exchanges for up to five (5) price levels
for all securities that are traded on the
BATS Exchanges in addition to the
BATS One Summary Feed (‘‘BATS One
Premium Feed’’). For each price level on
one of the BATS Exchanges, the BATS
One Premium Feed will include a twosided quote and the number of shares
available to buy and sell at that
particular price level.
The Exchange uses the following data
feeds to create the BATS One Summary
Feed and the BATS One Premium Feed,
each of which is available to other
vendors: EDGX Depth, EDGA Depth,
BYX Depth, and BZX Depth, and each
of which have been previously
published by the Commission.14 A
vendor that wishes to create a product
like the BATS One Summary Feed
could instead subscribe to EDGX Top,
EDGX Last Sale, EDGA Top, EDGA Last
Sale, BZX Top, BZX Last Sale, BYX
Top, and BYX Last Sale.15 The BATS
Exchanges are the exclusive distributors
of these individual data feeds from
which certain data elements are taken to
Exchange Act Release No. 71375 (January 23, 2014),
79 FR 4771 (January 29, 2014) (SR–BATS–2013–
059; SR–BYX–2013–039). Upon completion of the
business combination, DE Holdings and BGMI each
became intermediate holding companies, held
under a single new holding company. The new
holding company, formerly named ‘‘BATS Global
Markets Holdings, Inc.,’’ changed its name to
‘‘BATS Global Markets, Inc.’’ and BGMI changed its
name to ‘‘BATS Global Markets Holdings, Inc.’’
13 The Exchange understands that each of the
BATS Exchanges will separately file substantially
similar proposed rule changes with the Commission
to implement fees for the BATS One Feed.
14 See Securities Exchange Act Release Nos.
66864 (April 26, 2012), 77 FR 26064 (May 2, 2012)
(SR–EDGX–2012–14); 66863 (April 26, 2012), 77 FR
26059 (May 2, 2012) (SR–EDGA–2012–15); 69936
(July 3, 2013), 78 FR 41483 (July 10, 2013) (SR–
BATS–2013–39); 69935 (July 3, 2013), 78 FR 47447
(July 10, 2013) (SR–BYX–2013–023). See EDGA
Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and
(c), and BYX Rule 11.22 (a) and (c) for a description
of the depth of book feeds offered by each of the
BATS Exchanges.
15 See Securities Exchange Act Release Nos.
73990 (January 5, 2015) (SR–EDGA–2014–35)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to Adopt Top and Last Sale
Data Feeds); 73989 (January 5, 2015) (SR–EDGX–
2014–36) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Adopt
Top and Last Sale Data Feeds). See also BZX and
BYX Rules 11.22(d) and (g).
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create the BATS One Feed as well as the
feeds that a vendor may use to create a
product like the BATS One Summary
Feed. By contrast, the Exchange would
not be the exclusive distributor of the
aggregated and consolidated
information that comprises the BATS
One Feed. Any entity that receives, or
elects to received [sic], the individual
data feeds or the feeds that may be used
to create a product like the BATS One
Feed would be able to, if it so chooses,
to create a data feed with the same
information included in the BATS One
Feed and sell and distribute it to its
clients so that it could be received by
those clients as quickly as the BATS
One Feed would be received by those
same clients.16
The Exchange proposes to amend its
fee schedule to incorporate fees related
to the BATS One Feed. The Exchange
proposes to charge different fees to
vendors depending on whether the
vendor elects to receive: (i) the BATS
One Summary Feed; or (ii) the optional
BATS One Premium Feed. These fees
include the following, each of which are
described in detail below: (i) Distributor
Fees; 17 (ii) Usage Fees for both
Professional and Non-Professional
Users; 18 (iii) Enterprise Fees; 19 and (iv)
a Data Consolidation Fee. The amount
of each fee may differ depending on
16 See BATS One Approval Order, supra note 11.
The Exchange notes that a vendor can obtain the
underlying depth-of-book feeds as well as EDGX
Top, EDGX Last Sale, EDGA Top, EDGA Last Sale,
BZX Top, BZX Last Sale, BYX Top and BYX Last
Sale on the same latency basis as the Exchange
would receive the underlying depth-of-book feeds
necessary to create the BATS One Feed, including
the BATS One Summary Feed. Id.
17 The Exchange notes that Distributor Fees as
well as the distinctions based on external versus
internal distribution have been previously filed
with the Commission by Nasdaq, Nasdaq OMX BX,
and Nasdaq OMX PSX. See Nasdaq Rule 7019(b);
see also Securities Exchange Act Release No. 62876
(September 9, 2010), 75 FR 56624 (September 16,
2010) (SR–PHLX–2010–120); Securities Exchange
Act Release Nos. 62907 (September 14, 2010), 75 FR
57314 (September 20, 2010) (SR–NASDAQ–2010–
110); 59582 (March 16, 2009), 74 FR 12423 (March
24, 2009) (Order approving SR–NASDAQ–2008–
102); Securities Exchange Act Release No. 63442
(December 6, 2010), 75 FR 77029 (December 10,
2010) (SR–BX–2010–081).
18 The Exchange notes that User fees as well as
the distinctions based on professional and nonprofessional users have been previously filed with
or approved by the Commission by Nasdaq and the
New York Stock Exchange, Inc. (‘‘NYSE’’). See
Securities Exchange Act Release Nos. 59582 (March
16, 2009), 74 FR 12423 (March 24, 2009) (Order
approving SR–NASDAQ–2008–102).
19 The Exchange notes that Enterprise fees have
been previously filed with or approved by the
Commission by Nasdaq, NYSE and the CTA/CQ
Plans. See Nasdaq Rule 7047. Securities Exchange
Act Release Nos. 71507 (February 7, 2014), 79 FR
8763 (February 13, 2014) (SR–NASDAQ–20140011);
70211 (August 15, 2013), 78 FR 51781 (August 21,
2013) (SR–NYSE–2013–58); 70010 (July 19, 2013)
(File No. SR–CTA/CQ–2013–04).
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whether they use the BATS One Feed
data for internal or external distribution.
Vendors that distribute the BATS One
Feed data both internally and externally
will be subject to the higher of the two
Distributor Fees.
Internal Distributor Fees. As
proposed, each Internal Distributor that
receives only the BATS One Summary
Feed shall pay a fee of $10,000 per
month. The Exchange also proposes that
each Internal Distributor shall pay a fee
of $15,000 per month where they elect
to receive the BATS One Premium Feed.
The Exchange does not propose to
charge any User fees for the BATS One
Feed where the data is received and
subsequently internally distributed to
Professional or Non-Professional Users.
External Distributor Fees. The
Exchange proposes to charge those firms
that distribute the BATS One Feed
externally a fee of $5,000 per month for
the BATS One Summary Feed. As
proposed, each External Distributor
shall pay a fee of $12,500 per month
where they elect to receive the BATS
One Premium Feed.
The BATS One Feed is comprised of
data included in EDGX Depth, EDGA
Depth, BYX Depth, and BZX Depth.20
Currently, an External Distributor could
create a competing product to the BATS
One Premium Feed 21 by purchasing the
[sic] each of these depth of book
products from the individual BATS
Exchanges and then performing its own
aggregation and consolidation functions.
The combined External Distributor fees
for these individual data feeds of the
BATS Exchanges is $12,500 per
month,22 equal to the $12,500 per
month External Distributor Fee
proposed for the BATS One Premium
Feed. An External Distributor that seeks
to create a competing product to the
BATS One Summary Feed could instead
subscribe to the following data feeds:
EDGX Top, EDGX Last Sale, EDGA Top,
EDGA Last Sale, BZX Top, BZX Last
Sale, BYX Top, and BYX Last Sale,23
and then perform their own aggregation
and consolidation function. The
combined External Distributor fees for
20 See EDGA Rule 13.8, EDGX Rule 13.8, BZX
Rule 11.22(a) and (c), and BYX Rule 11.22 (a) and
(c) for a description of the depth of book feeds
offered by each of the BATS Exchanges.
21 Like the Exchange, an External Distributor
would also be able to create a competing product
to the BATS One Summary Feed from the data
received via EDGX Depth, EDGA Depth, BYX
Depth, and BZX Depth, without having to
separately purchase the top and last sale feeds from
each of the BATS Exchanges.
22 The monthly External Distributor fee is $2,500
per month for EDGX Depth, $2,500 per month for
EDGA Depth, $2,500 for BYX Depth, and $5,000 for
BZX Depth.
23 See supra note 15. See also BATS Rule 11.22(d)
and (g).
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Federal Register / Vol. 80, No. 36 / Tuesday, February 24, 2015 / Notices
these individual data feeds of the BATS
Exchanges is $5,000 per month,24 equal
to the $5,000 per month External
Distributor Fee proposed for the BATS
One Summary Feed. To ensure that
vendors could compete with the
Exchange by creating the same product
as the BATS One Feed and selling it to
their clients, the Exchange proposes to
charge External Distributors an External
Distributor fee that equals the combined
External Distributor fees for each of the
individual feeds listed above.
The Exchange also proposes to
establish a New External Distributor
Credit under which new External
Distributors of the BATS One Summary
Feed will not be charged a Distributor
Fee for their first three (3) months in
order to allow them to enlist new Users
to receive the BATS One Feed.25 The
New External Distributor Fee Credit will
not be available to External Distributors
of the BATS One Premium Feed. The
Exchange does not believe the New
External Distributor Credit would
inhibit a vendor from creating a
competing product and offer a similar
free period as the Exchange.
Specifically, a vendor seeking to create
the BATS One Summary Feed could do
so by subscribing to EDGX Top, EDGX
Last Sale, EDGA Top, EDGA Last Sale,
BZX Top, BZX Last Sale, BYX Top and
BYX Last Sale, all of which are either
free or also include a New External
Distributor Credit identical to that
proposed for the BATS One Summary
Feed. As a result, a competing vendor
would incur similar costs as the
Exchange in offering such free period
for a competing product and may do so
on the same terms as the Exchange.
tkelley on DSK3SPTVN1PROD with NOTICES
User Fees
In addition to Internal and External
Distributor Fees, the Exchange proposes
to charge those who receive the BATS
One Feed from External Distributors
different fees for both their Professional
Users and Non-Professional Users. The
Exchange will assess a monthly fee for
Professional Users of $10.00 per User for
receipt of the BATS One Summary Feed
or $15.00 per User who elects to also
24 The monthly External Distributor fee is $1,250
per month for EDGX Top and EDGX Last Sale, free
for EDGA Top and EDGA Last Sale, $1,250 for BYX
Top and BYX Last Sale (as proposed herein), and
$2,500 for BZX Top and BZX Last Sale. See SR–
EDGA–2015–09 and SR–EDGX–2015–09. See also
the BZX Fee Schedule available at https://
www.batstrading.com/support/fee_schedule/bzx/.
25 The Exchange notes that just as a third party
vendor could choose to offer special pricing in
order to incentivize data recipients to perform
necessary development and other work in order to
receive and distribute a new data product, the
Exchange has proposed pricing to incentivize data
recipients to take and distribute the BATS One
Feed.
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receive the BATS One Premium Feed.
Non-Professional Users will be assessed
a monthly fee of $0.25 per user for the
BATS One Summary Feed or $0.50 per
user where they elects to receive the
BATS One Premium Feed.
External Distributors must count
every Professional User and NonProfessional User to which they provide
BATS One Feed data. Thus, the
Distributor’s count will include every
person and device that accesses the data
regardless of the purpose for which the
individual or device uses the data.26
Distributors must report all Professional
and Non-Professional Users in
accordance with the following:
• In connection with an External
Distributor’s distribution of the BATS
One Feed, the Distributor should count
as one User each unique User that the
Distributor has entitled to have access to
the BATS One Feed. However, where a
device is dedicated specifically to a
single individual, the Distributor should
count only the individual and need not
count the device.
• The External Distributor should
identify and report each unique User. If
a User uses the same unique method to
gain access to the BATS One Feed, the
Distributor should count that as one
User. However, if a unique User uses
multiple methods to gain access to the
BATS One Feed (e.g., a single User has
multiple passwords and user
identifications), the External Distributor
should report all of those methods as an
individual User.
• External Distributors should report
each unique individual person who
receives access through multiple
devices as one User so long as each
device is dedicated specifically to that
individual.
• If an External Distributor entitles
one or more individuals to use the same
device, the External Distributor should
include only the individuals, and not
the device, in the count.
Each External Distributor will receive
a credit against its monthly Distributor
Fee for the BATS One Feed equal to the
amount of its monthly Usage Fees up to
a maximum of the Distributor Fee for
the BATS One Feed. For example, an
External Distributor will be subject to a
26 Requiring that every person or device to which
they provide the data is counted by the Distributor
receiving the BATS One Feed is similar to the
NYSE Unit-of-Count Policy. The only difference is
that the NYSE Unit-of-Count Policy requires the
counting of users receiving a market data product
through both internal and external distribution.
Because the Exchange proposes to charge Usage
Fees solely to recipient firms who’s Users receive
data from an external distributor and not through
internal distribution, it only requires the counting
of Users by Distributors that disseminate the BATS
One Feed externally.
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9795
$12,500 monthly Distributor Fee where
they elect to receive the BATS One
Premium Feed. If that External
Distributor reports User quantities
totaling $12,500 or more of monthly
usage of the BATS One Premium Feed,
it will pay no net Distributor Fee,
whereas if that same External
Distributor were to report User
quantities totaling $11,500 of monthly
usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors
will remain subject to the per User fees
discussed above. In every case the
Exchange will receive at least $12,500 in
connection with the distribution of the
BATS One Feed (through a combination
of the External Distribution Fee and per
User Fees).
Enterprise Fee. The Exchange also
proposes to establish a $50,000 per
month Enterprise Fee that will permit a
recipient firm who receives the BATS
Summary Feed portion of the BATS One
Feed from an External Distributor to
receive the data for an unlimited
number of Professional and NonProfessional Users and $100,000 per
month for recipient firms who elect to
receive the BATS One Premium Feed.
For example, if a recipient firm had
15,000 Professional Users who each
receive the BATS One Summary Feed
portion of the BATS One Feed at $10.00
per month, then that recipient firm will
pay $150,000 per month in Professional
Users fees. Under the proposed
Enterprise Fee, the recipient firm will
pay a flat fee of $50,000 for an unlimited
number of Professional and NonProfessional Users for the BATS
Summary Feed portion of the BATS One
Feed. A recipient firm must pay a
separate Enterprise Fee for each
External Distributor that controls
display of the BATS One Feed if it
wishes such User to be covered by an
Enterprise Fee rather than by per-User
fees. A recipient firms that pays the
Enterprise Fee will not have to report its
number of such Users on a monthly
basis. However, every six months, a
recipient firm must provide the
Exchange with a count of the total
number of natural person users of each
product, including both Professional
and Non-Professional Users. The
Enterprise Fee would be in addition to
the applicable Distributor Fee.
Data Consolidation Fee
The Exchange also proposes to charge
External Distributors of the BATS One
Feed a separate Data Consolidation Fee,
which reflects the value of the
aggregation and consolidation function
the Exchange performs in creating the
BATS One Feed. As stated above, the
Exchange creates the BATS One Feed
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from data derived from the EDGX
Depth, EDGA Depth, BYX Depth, and
BZX Depth.27 The Exchange notes that
an External Distributor could create a
competing product to the BATS One
Feed based on these individual data
feeds, or, alternatively, the applicable
Top and Last Sale products offered by
the Exchanges, and could charge its
clients a fee that it believes reflects the
value of the aggregation and
consolidation function. The Exchanges
[sic] believes that the incremental cost
to a particular vendor for aggregation
can be supported by the vendor’s
revenue opportunity and may be
inconsequential if such vendor already
has systems in place to perform these
functions as part of creating its
proprietary market data products and is
able to allocate these costs over
numerous products and customer
relationships. For these reasons, the
Exchange believes that vendors could
readily offer a product similar to the
BATS One Feed on a competitive basis
at a similar cost.
The Exchange does not propose to
charge Internal Distributors the separate
Data Consolidation Fee as the proposed
Internal Distributor Fees are greater than
the cost of subscribing to each of the
underlying individual feed. As
discussed above, each Internal
Distributor that receives only the BATS
One Summary Feed shall pay a fee of
$10,000 per month, as compared to
$5,000, which is the total of the
underlying feeds.28 Each Internal
Distributor shall pay a fee of $15,000 per
month where they elect to receive the
BATS One Premium Feed, as compared
to $12,500, which is the total cost of the
underlying depth feeds.29 The increased
cost of the BATS One Feed is designed
to include the value of the aggregation
and consolidation function the
Exchange performs in creating the BATS
One Feed. Therefore, the Exchange does
not propose to charge Internal
Distributors a separate Data
Consolidation Fee.
tkelley on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,30
in general, and furthers the objectives of
Section 6(b)(4),31 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
27 See
EDGA Rule 13.8, EDGX Rule 13.8, BZX
Rule 11.22(a) and (c), and BYX Rule 11.22 (a) and
(c) for a description of the depth of book feeds
offered by each of the BATS Exchanges.
28 See supra note 24.
29 See supra note 22.
30 15 U.S.C. 78f.
31 15 U.S.C. 78f(b)(4).
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other charges among its Members and
other persons using its facilities. The
Exchange believes that the proposed
rates are equitable and nondiscriminatory in that they apply
uniformly to all Members. The
Exchange believes the proposed fees are
competitive with those charged by other
venues and, therefore, reasonable and
equitably allocated to Members.
Technical, Non-Substantive Changes
The Exchange believes that the nonsubstantive changes to its fee schedule
are reasonable because they are nonsubstantive changes that are designed to
amend any fee, nor alter the manner in
which it assesses fees. These nonsubstantive, technical changes to the fee
schedule are intended to streamline the
naming convention of the Exchange’s
market data products, making the fee
schedule clearer and less confusing for
investors, 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.
Definitions Applicable to Market Data
Fees
The Exchange believes that the
proposed definitions are reasonable
because they are designed to provide
greater transparency to Members with
regard to how the Exchange assesses
fees for market data. The Exchange
notes that none of the proposed
definitions are designed to amend any
fee, nor alter the manner in which it
assesses fees. The Exchange believes
that Members would benefit from clear
guidance in its fee schedule that
describes the manner in which the
Exchange would assess fees. These
definitions are 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. Lastly, the proposed
definitions are based on existing rules of
the Nasdaq Stock Market LLC
(‘‘Nasdaq’’).32
32 The proposed definition of ‘‘Distributor’’ is
similar to Nasdaq Rule 7047(d)(1). The proposed
definition of ‘‘Internal Distributor’’ is similar to
Nasdaq Rule 7047(d)(1)(A). The proposed definition
of ‘‘External Distributor’’ is similar to Nasdaq Rule
7047(d)(1)(B). The proposed definition of
‘‘Professional User’’ is similar to Nasdaq Rule
7047(d)(3)(A). The proposed definition of ‘‘NonProfessional User’’ is similar to Nasdaq Rule
7047(d)(3)(B).
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BYX Top and BYX Last Sale
The Exchange believes that its
amended fees for BYX Last Sale and
BYX Top are consistent with Section
6(b)(4) of the Act 33 because they
provide for an equitable allocation of
reasonable dues, fees, and other charges
among its members and other recipients
of Exchange data. The Exchange also
believes the proposed fees for BYX Last
Sale and BYX Top are reasonable and
equitable in light of the benefits to data
recipients. The Exchange believes that
the decreased External Distributor Fees
for BYX Last Sale and BYX Top are
equitable and reasonable in that they
result in a fee reduction for External
Distributors. Subscribers to either BYX
Top or BYX Last Sale would be able to
also receive, upon request and at no
additional cost, BYX Last Sale or BYX
Top, as applicable. The Exchange
believes that the proposed pricing
model is simple and easy for data
recipients to comply with, and thus,
will result in a minimal additional
administrative burden for data
recipients who elect to receive both
BYX Last Sale and BYX Top at no
additional cost. BYX Last Sale and BYX
Top are distributed and purchased on a
voluntary basis, in that neither the
Exchanges nor market data distributors
are required by any rule or regulation to
make this data available. Accordingly,
Distributors and Users can discontinue
use at any time and for any reason,
including due to an assessment of the
reasonableness of fees charged. Lastly,
the Exchange also believes that the
proposed amendments to its fee
schedule are reasonable and nondiscriminatory because it [sic] will
apply uniformly to all Members.
BATS One Feed
The Exchange also believes that the
proposed fees for the BATS One Feed
are consistent with Section 6(b) of the
Act,34 in general, and Section 6(b)(4) of
the Act,35 in particular, in that it [sic]
they provide for an equitable allocation
of reasonable fees among Users and
recipients of the data and are not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that the proposed rule change
is consistent with Section 11(A) of the
Act 36 in that it supports (i) fair
competition among brokers and dealers,
among exchange markets, and between
exchange markets and markets other
than exchange markets and (ii) the
33 15
U.S.C. 78f(b)(4).
U.S.C. 78f.
35 15 U.S.C. 78f(b)(4).
36 15 U.S.C. 78k–1.
34 15
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availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities. Furthermore, the proposed
rule change is consistent with Rule 603
of Regulation NMS,37 which provides
that any national securities exchange
that distributes information with respect
to quotations for or transactions in an
NMS stock do so on terms that are not
unreasonably discriminatory. In
adopting Regulation NMS, the
Commission granted self-regulatory
organizations and broker-dealers
increased authority and flexibility to
offer new and unique market data to the
public. It was believed that this
authority would expand the amount of
data available to consumers, and also
spur innovation and competition for the
provision of market data.
In addition, the proposed fees would
not permit unfair discrimination
because all of the Exchange’s customers
and market data vendors will be subject
to the proposed fee structure on an
equivalent basis. The BATS One Feed
would be distributed and purchased on
a voluntary basis, in that neither the
BATS Exchanges nor market data
distributors are required by any rule or
regulation to make this data available.
Accordingly, Distributors and Users can
discontinue use at any time and for any
reason, including due to an assessment
of the reasonableness of fees charged. In
addition, any customer that wishes to
purchase one or more of the individual
data feeds offered by the BATS
Exchanges would be able to do so.
The Exchange has taken into
consideration its affiliated relationship
with EDGA, EDGX, and BZX in its
design of the BATS One Feed to assure
that vendors would be able to offer a
similar product on the same terms as the
Exchange from a cost perspective. While
the BATS Exchanges are the exclusive
distributors of the individual data feeds
from which certain data elements may
be taken to create the BATS One Feed,
they are not the exclusive distributors of
the aggregated and consolidated
information that comprises the BATS
One Feed. Any entity that receives, or
elects to receive, the individual data
feeds would be able, if it so chooses, to
create a data feed with the same
information included in the BATS One
Feed and sell and distribute it to its
clients so that it could be received by
those clients as quickly as the BATS
One Feed would be received by those
same clients with no greater cost than
the Exchange.38
37 See
17 CFR 242.603.
BATS One Approval Order, supra note 11.
The Exchange notes that a vendor can obtain the
38 See
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17:31 Feb 23, 2015
Jkt 235001
In addition, vendors and subscribers
that do not wish to purchase the BATS
One Feed may separately purchase the
individual underlying products, and if
they so choose, perform a similar
aggregation and consolidation function
that the Exchange performs in creating
the BATS One Feed. To enable such
competition, the Exchange is offering
the BATS One Feed on terms that a
subscriber of those underlying feeds
could offer a competing product if it so
chooses.
The Exchange notes that the use of the
BATS One Feed is entirely optional.
Firms have a wide variety of alternative
market data products from which to
choose, including the Exchanges’ own
underlying data products, the Nasdaq
and the NYSE proprietary data products
described in this filing,39 and
consolidated data. Moreover, the
Exchange is not required to make any
proprietary data products available or to
offer any specific pricing alternatives to
any customers.
In addition, the fees that are the
subject of this rule filing are constrained
by competition. As explained below in
the Exchange’s Statement on Burden on
Competition, the existence of
alternatives to the BATS One Feed
further ensures that the Exchange
cannot set unreasonable fees, or fees
that are unreasonably discriminatory,
when vendors and subscribers can elect
such alternatives. That is, the Exchange
competes with other exchanges (and
their affiliates) that provide similar
market data products. If another
exchange (or its affiliate) were to charge
less to consolidate and distribute its
similar product than the Exchange
charges to consolidate and distribute the
BATS One Feed, prospective Users
likely would not subscribe to, or would
cease subscribing to, the BATS One
Feed. In addition, the Exchange would
compete with unaffiliated market data
vendors who would be in a position to
consolidate and distribute the same data
that comprises the BATS One Feed into
the vendor’s own comparable market
data product. If the third-party vendor is
able to provide the exact same data for
a lower cost, prospective Users would
avail themselves of that lower cost and
elect not to take the BATS One Feed.
The Exchange notes that the
Commission is not required to
undertake a cost-of-service or
underlying depth-of-book feeds as well as EDGX
Top, EDGX Last Sale, EDGA Top, EDGA Last Sale,
BZX Top, BZX Last Sale, BYX Top and BYX Last
Sale on the same latency basis as the Exchange
would receive the underlying depth-of-book feeds
necessary to create the BATS One Feed, including
the BATS One Summary Feed. Id.
39 See infra note 53.
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9797
ratemaking approach. The Exchange
believes that, even if it were possible as
a matter of economic theory, cost-based
pricing for non-core market data would
be so complicated that it could not be
done practically.40
For these reasons, the Exchange
believes that the proposed fees are
reasonable, equitable, and not unfairly
discriminatory.
User Fees. The Exchange believes that
implementing the Professional and NonProfessional User fees for the BATS One
Feed is reasonable because it will make
the product more affordable and result
in greater availability to Professional
and Non-Professional Users. Moreover,
introducing a modest Non-Professional
User fee for the BATS One Feed is
reasonable because it provides an
additional method for retail investors to
access the BATS One Feed data by
providing the same data that is available
to Professional Users. The Exchange
believes that the proposed fees are
equitable and not unfairly
discriminatory because they will be
charged uniformly to recipient firms
and Users. The fee structure of
differentiated Professional and NonProfessional fees has long been used by
other exchanges for their proprietary
data products, and by the Nasdaq UTP
and the CTA and CQ Plans in order to
reduce the price of data to retail
investors and make it more broadly
40 The Exchange believes that cost-based pricing
would be impractical because it would create
enormous administrative burdens for all parties,
including the Commission, to cost-regulate a large
number of participants and standardize and analyze
extraordinary amounts of information, accounts,
and reports. In addition, it is impossible to regulate
market data prices in isolation from prices charged
by markets for other services that are joint products.
Cost-based rate regulation would also lead to
litigation and may distort incentives, including
those to minimize costs and to innovate, leading to
further waste. Under cost-based pricing, the
Commission would be burdened with determining
a fair rate of return, and the industry could
experience frequent rate increases based on
escalating expense levels. Even in industries
historically subject to utility regulation, cost-based
ratemaking has been discredited. As such, the
Exchange believes that cost-based ratemaking
would be inappropriate for proprietary market data
and inconsistent with Congress’s direction that the
Commission use its authority to foster the
development of the national market system, and
that market forces will continue to provide
appropriate pricing discipline. See Appendix C to
NYSE’s comments to the Commission’s 2000
Concept Release on the Regulation of Market
Information Fees and Revenues, which can be
found on the Commission’s Web site at https://
www.sec.gov/rules/concept/s72899/buck1.htm. See
also Securities Exchange Act Release No. 73816
(December 11, 2014), 79 FR 75200 (December 17,
2014) (SR–NYSE–2014–64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to Establish an Access Fee for the NYSE Best Quote
and Trades Data Feed, Operative December 1,
2014).
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tkelley on DSK3SPTVN1PROD with NOTICES
available.41 Offering the BATS One Feed
to Non-Professional Users with the same
data available to Professional Users
results in greater equity among data
recipients.
In addition, the proposed fees are
reasonable when compared to fees for
comparable products offered by the
NYSE, Nasdaq, and under the CTA and
CQ Plans. Specifically, Nasdaq offers
Nasdaq Basic, which includes best bid
and offer and last sale data for Nasdaq
and the FINRA/Nasdaq TRF, for a
monthly fee of $26 per professional
subscriber and $1 per non-professional
subscriber; alternatively, a broker-dealer
may purchase an enterprise license at a
rate of $350,000 per month for internal
distribution to an unlimited number of
professional users or $365,000 per
month for external distribution for up to
16,000 professional users, plus $2 for
each additional professional user over
16,000.42 The NYSE offers BQT, which
provides BBO and last sale information
for the NYSE, NYSE Arca, and NYSE
MKT. To obtain BQT, subscribers must
purchase the [sic] each underlying data
feed for a monthly fee of $18 per
professional subscriber and $1 per nonprofessional subscriber; alternatively, a
broker-dealer may purchase an
enterprise license at a rate of $365,000
per month for an unlimited number of
professional users. The NYSE does not
offer an enterprise license for nonprofessional users. The Exchange’s
proposed per-User Fees are lower than
the NYSE’s and Nasdaq’s fees. In
addition, the Exchange is proposing
Professional and Non-Professional User
fees and Enterprise Fees that are less
than the fees currently charged by the
CTA and CQ Plans. Under the CTA and
CQ Plans, Tape A consolidated last sale
and bid-ask data are offered together for
a monthly fee of $20-$50 per device,
depending on the number of
professional subscribers, and $1.00 per
non-professional subscriber, depending
on the number of non-professional
subscribers.43 A monthly enterprise fee
of $686,400 is available under which a
U.S. registered broker-dealer may
distribute data to an unlimited number
of its own employees and its nonprofessional subscriber brokerage
account customers. Finally, in contrast
to Nasdaq UTP and the CTA and CQ
Plans, the Exchange also will permit
41 See, e.g., Securities Exchange Act Release No.
20002, File No. S7–433 (July 22, 1983) (establishing
nonprofessional fees for CTA data); Nasdaq Rules
7023(b), 7047.
42 See Nasdaq Rule 7047.
43 See CTA Plan dated September 9, 2013 and CQ
Plan dated September 9, 2013, available at
https://cta.nyxdata.com/CTA.
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Jkt 235001
enterprise distribution by a non-brokerdealer.
Enterprise Fee. The proposed
Enterprise Fee for the BATS One Feed
is reasonable as the fee proposed is less
than the enterprise fees currently
charged for underlying data feeds for
NYSE BQT, Nasdaq Basic, and
consolidated data distributed under the
Nasdaq UTP and the CTA and CQ Plans.
In addition, the Enterprise Fee could
result in a fee reduction for recipient
firms with a large number of
Professional and Non-Professional
Users. If a recipient firm has a smaller
number of Professional Users of the
BATS One Feed, then it may continue
using the per User structure and benefit
from the per User Fee reductions. By
reducing prices for recipient firms with
a large number of Professional and NonProfessional Users, the Exchange
believes that more firms may choose to
receive and to distribute the BATS One
Feed, thereby expanding the
distribution of this market data for the
benefit of investors.
The Exchange further believes that the
proposed Enterprise Fee is reasonable
because it will simplify reporting for
certain recipients that have large
numbers of Professional and NonProfessional Users. Firms that pay the
proposed Enterprise Fee will not have to
report the number of Users on a
monthly basis as they currently do, but
rather will only have to count natural
person users every six months, which is
a significant reduction in administrative
burden. Finally, the Exchange believes
that it is equitable and not unfairly
discriminatory to establish an Enterprise
Fee because it reduces the Exchange’s
costs and the Distributor’s
administrative burdens in tracking and
auditing large numbers of users.
Distributor Fee. The Exchange
believes that the proposed Distributor
Fees are also reasonable, equitably
allocated, and not unreasonably
discriminatory. The fees for Members
and non-Members are uniform except
with respect to reasonable distinctions
with respect to internal and external
distribution.44 The Exchange believes
that the Distributor Fees for the BATS
One Feed are reasonable and fair in light
44 The
Exchange notes that distinctions based on
external versus internal distribution have been
previously filed with the Commission by Nasdaq,
Nasdaq OMX BX, and Nasdaq OMX PSX. See
Nasdaq Rule 019(b); see also Securities Exchange
Act Release No. 62876 (September 9, 2010), 75 FR
56624 (September 16, 2010) (SR–PHLX–2010–120);
Securities Exchange Act Release No. 62907
(September 14, 2010), 75 FR 57314 (September 20,
2010) (SR–NASDAQ–2010–110); Securities
Exchange Act Release No. 63442 (December 6,
2010), 75 FR 77029 (December 10, 2010) (SR–BX–
2010–081).
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of alternatives offered by other market
centers. First, although the Internal
Distributor fee is higher than those of
competitor products, there are no User
fees assessed for Users that receive the
BATS One Feed data through an
Internal Distributor, which results in a
net cost that is lower than competitor
products for many data recipients and
will be easier to administer.
The proposed Distributor Fees for the
BATS One Feed are also designed to
ensure that vendors could compete with
the Exchange by creating a similar
product as the BATS One Feed. The
Exchange believes that the proposed
Distributor Fees are equitable and
reasonable as it [sic] equals the
combined fee of subscribing to each
individual data feed of the BATS
Exchanges, which have been previously
published by the Commission.45
Currently, an External Distributor that
seeks to create a competing product to
the BATS One Premium Feed 46 would
need to purchase each of the depth of
book products from the individual
BATS Exchanges and then perform its
own aggregation and consolidation
functions.47 The combined external
distributor fees for these individual
depth of book feeds of the BATS
Exchanges is $12,500 per month,48
equal to the $12,500 per month External
Distributor Fee proposed for the BATS
One Premium Feed. An External
Distributor that seeks to create a
competing product to the BATS One
Summary Feed could alternatively
subscribe to EDGX Top, EDGX Last Sale,
EDGA Top, EDGA Last Sale, BZX Top,
BZX Last Sale, BYX Top, and BYX Last
Sale, and then perform their own
aggregation and consolidation function.
The combined external distributor fees
for these individual data feeds of the
BATS Exchanges is $5,000 per month,49
equal to the $5,000 per month External
Distributor Fee proposed for the BATS
One Summary Feed. In addition, the
Exchange believes it is reasonable to not
charge External Distributors a
Distribution Fee during their first three
(3) months and does not believe this
would inhibit a vendor from creating a
competing product and offer a similar
45 See
supra notes 14 and 15.
the Exchange, an External Distributor
would also be able to create a competing product
to the BATS One Summary Feed from the data
received via EDGX Depth, EDGA Depth, BYX
Depth, and BZX Depth, without having to
separately purchase the top and last sale feeds from
each of the BATS Exchanges.
47 As discussed, the Exchange proposes to charge
External Distributors a separate Data Consolidation
Fee to reflect the value of the consolidation
function performed by the Exchange.
48 See supra note 22.
49 See supra note 24.
46 Like
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free period as the Exchange.
Specifically, a vendor seeking to create
the BATS One Summary Feed could do
so by subscribing to EDGX Top, EDGX
Last Sale, EDGA Top, EDGA Last Sale,
BZX Top, BZX Last Sale, BYX Top and
BYX Last Sale, all of which are either
free or also include a New External
Distributor Credit identical to that
proposed for the BATS One Summary
Feed. As a result, a competing vendor
would incur similar costs as the
Exchange in offering such free period
for a competing product and may do so
on the same terms as the Exchange.
tkelley on DSK3SPTVN1PROD with NOTICES
Data Consolidation Fee
The Exchange believes that the
proposed $1,000 per month Data
Consolidation Fee charged to External
Distributors who receive the BATS One
Feed is reasonable because it represents
the value of the data aggregation and
consolidation function that the
Exchange performs. The Exchange also
notes that its proposed $1,000 per
month Data Consolidation Fee is
identical to an access fee charged by the
NYSE for BQT, which is also designed
to represent the value of the data
aggregation function provided by the
NYSE in constructing its BQT feed.50
The Exchange further believes the
proposed Data Consolidation Fee is not
designed to permit unfair
discrimination because all External
Distributors who subscribe to the BATS
One Feed will be charged the same fee.
The Exchange believes it is reasonable
and not unfairly discriminatory to not
charge Internal Distributors a separate
Data Consolidation Fee as the proposed
Internal Distributor Fees are greater than
the cost of subscribing to each of the
underlying individual feed. As
discussed above, each Internal
Distributor that receives only the BATS
One Summary Feed shall pay a fee of
$10,000 per month as compared to
$5,000, which is the total of the
underlying feeds.51 Each Internal
Distributor shall pay a fee of $15,000 per
month where they elect to receive the
BATS One Premium Feed as compared
to $12,500, which is the total cost of the
underlying depth feeds.52 The increased
cost of the BATS One Feed is designed
to include the value of the aggregation
and consolidation function the
Exchange performs in creating the BATS
50 See Securities Exchange Act Release No. 73816
(December 11, 2014), 79 FR 75200 (December 17,
2014) (SR–NYSE–2014–64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to Establish an Access Fee for the NYSE Best Quote
and Trades Data Feed, Operative December 1,
2014).
51 See supra note 24.
52 See supra note 22.
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One Feed. Therefore, the Exchange
believes the proposed application of the
Data Consolidation Fee is reasonable
and would not permit unfair
discrimination.
In addition, a vendor could create a
competing product based on the
individual data feeds and charge its
clients a fee that it believes reflects the
value of the aggregation and
consolidation function that is
competitive with the BATS One Feed
pricing. The Exchanges believes that the
incremental cost to a particular vendor
for aggregation can be supported by the
vendor’s revenue opportunity and may
be inconsequential if such vendor
already has systems in place to perform
these functions as part of creating its
proprietary market data products and is
able to allocate these costs over
numerous products and customer
relationships. Therefore, the Exchange
believes the proposed pricing would
enable a vendor to create a competing
product based on the individual data
feeds and charge its clients a fee that it
believes reflects the value of the
aggregation and consolidation function
that is competitive with BATS One Feed
pricing as discussed further below.
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.
Technical, Non-Substantive Changes
The proposed name changes to the
Exchange’s market data products will
not result in any burden on competition.
The proposed amendments are not
designed to address any competitive
issues, but rather provide consistency
amongst the naming conventions used
for the Exchange market data products,
resulting in additional clarity and
transparency to Members, Users, and
the investing public regarding the
Exchange’s market data products. The
Exchange notes that none of the
proposed non-substantive changes are
designed to amend any fee, nor alter the
manner in which it assesses fees. These
non-substantive, technical changes to
the fee schedule are intended to make
the fee schedule clearer and less
confusing for investors and eliminate
potential investor confusion.
Definitions Applicable to Market Data
Fees
The proposed definitions applicable
to market data fees will not result in any
burden on competition. The proposed
definitions are not designed to amend
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Fmt 4703
Sfmt 4703
9799
any fee, nor alter the manner in which
it assesses fees. The Exchange believes
that Members would benefit from clear
guidance in its fee schedule that
describes the manner in which the
Exchange would assess fees for market
data. These definitions are intended to
make the Fee Schedule clearer and less
confusing for investors and are not
designed to have a competitive impact.
BYX Top and BYX Last Sale
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’s ability to price BYX
Last Sale and BYX Top are constrained
by: (i) Competition among exchanges,
other trading platforms, and Trade
Reporting Facilities (‘‘TRF’’) that
compete with each other in a variety of
dimensions; (ii) the existence of
inexpensive real-time consolidated data
and market-specific data and free
delayed data; and (iii) the inherent
contestability of the market for
proprietary data.
The Exchange and its market data
products are subject to significant
competitive forces and the proposed
fees represent responses to that
competition. To start, the Exchange
competes intensely for order flow. It
competes with the other national
securities exchanges that currently trade
equities, with electronic communication
networks, with quotes posted in
FINRA’s Alternative Display Facility,
with alternative trading systems, and
with securities firms that primarily
trade as principal with their customer
order flow.
In addition, BYX Last Sale and BYX
Top compete with a number of
alternative products. For instance, BYX
Last Sale and BYX Top do not provide
a complete picture of all trading activity
in a security. Rather, the other national
securities exchanges, the several TRFs
of FINRA, and Electronic
Communication Networks (‘‘ECN’’) that
produce proprietary data all produce
trades and trade reports. Each is
currently permitted to produce last sale
information products, and many
currently do, including Nasdaq and
NYSE. In addition, market participants
can gain access to BYX last sale prices
and top-of-book quotations though
integrated with the prices of other
markets on feeds made available
through the SIPs.
In sum, the availability of a variety of
alternative sources of information
imposes significant competitive
pressures on Exchange data products
and the Exchange’s compelling need to
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Federal Register / Vol. 80, No. 36 / Tuesday, February 24, 2015 / Notices
attract order flow imposes significant
competitive pressure on the Exchange to
act equitably, fairly, and reasonably in
setting the proposed data product fees.
The proposed data product fees are, in
part, responses to that pressure. The
Exchange believes that the proposed
fees would reflect an equitable
allocation of its overall costs to users of
its facilities.
In addition, when establishing the
proposed fees, the Exchange considered
the competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
Users. The existence of alternatives to
BYX Last Sale and BYX Top, including
existing similar feeds by other
exchanges, consolidated data, and
proprietary data from other sources,
ensures that the Exchange cannot set
unreasonable fees, or fees that are
unreasonably discriminatory, when
vendors and subscribers can elect these
alternatives or choose not to purchase a
specific proprietary data product if its
cost to purchase is not justified by the
returns any particular vendor or
subscriber would achieve through the
purchase.
tkelley on DSK3SPTVN1PROD with NOTICES
BATS One Feed
The BATS One Feed will enhance
competition because it not only
provides content that is competitive
with the similar products offered by
other exchanges, but will provide
pricing that is competitive as well. The
BATS One Feed provides investors with
an alternative option for receiving
market data and competes directly with
similar market data products currently
offered by the NYSE and Nasdaq.53 As
53 See Nasdaq Basic, https://
www.nasdaqtrader.com/
Trader.aspx?id=nasdaqbasic (last visited May 29,
2014) (data feed offering the BBO and Last Sale
information for all U.S. exchange-listed securities
based on liquidity within the Nasdaq market center,
as well as trades reported to the FINRA/Nasdaq
Trade Reporting Facility (‘‘TRF’’)); Nasdaq NLS
Plus, https://www.nasdaqtrader.com/
Trader.aspx?id=NLSplus (last visited July 8, 2014)
(data feed providing last sale data as well as
consolidated volume from the following Nasdaq
OMX markets for U.S. exchange-listed securities:
Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and
Nasdaq OMX PSX); Securities Exchange Act
Release No. 73553 (November 6, 2014), 79 FR 67491
(November 13, 2014) (SR–NYSE–2014–40) (Notice
of Amendment No. 1 and Order Granting
Accelerated Approval to a Proposed Rule Change,
as Modified by Amendment No.1, To Establish the
NYSE Best Quote & Trades (‘‘BQT’’) Data Feed);
https://www.nyxdata.com/Data-Products/NYSEBest-Quote-and-Trades (last visited May 27, 2014)
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previously stated, the fees for the BATS
One Feed are significantly lower than
alternative exchange products. The
BATS One Feed is less expensive per
professional user and more than 85%
less expensive for an enterprise license
for professional users (50% less for nonprofessional users) when compared to a
similar competitor exchange product,
offering firms a lower cost alternative
for similar content.
Although the BATS Exchanges are the
exclusive distributors of the individual
data feeds from which certain data
elements would be taken to create the
BATS One Feed, the Exchange would
not be the exclusive distributor of the
aggregated and consolidated
information that would compose the
proposed BATS One Feed. Any entity
that receives, or elects to received, the
underlying data feeds would be able to,
if it so chooses, to create a data feed
with the same information included in
the BATS One Feed and sell and
distribute it to its clients so that it could
be received by those clients as quickly
as the BATS One Feed would be
received by those same clients at a
similar cost.54
The proposed pricing the Exchange
would charge clients for the BATS One
Feed compared to the cost of the
individual data feeds from the BATS
Exchanges would enable a vendor to
receive the underlying data feeds and
offer a similar product on a competitive
basis and with no greater cost than the
Exchange. The pricing the Exchange
would charge for the BATS One Feed
would not be lower than the cost to a
vendor of receiving the underlying data
feeds. The pricing the Exchange would
charge clients for the BATS One Feed
compared to the cost of the individual
data feeds from the BATS Exchanges
would enable a vendor to receive the
underlying data feeds and offer a similar
product on a competitive basis and with
no greater cost than the Exchange. The
Distributor Fees that the Exchange
intends to propose for the BATS One
Feed would not be less than the
combined fee of subscribing to each
individual data feed.55 In addition, the
(data feed providing unified view of BBO and last
sale information for the NYSE, NYSE Arca, and
NYSE MKT).
54 See BATS One Approval Order, supra note 11.
55 The combined external distribution fee for the
individual depth of book data feeds of the BATS
Exchanges is $12,500.00 per month. The monthly
External Distributor fee is $2,500 per month for the
EDGX Depth, $2,500 per month for the EDGA
Depth, $2,500 for BYX Depth, and $5,000 for BZX
Depth. The combined external distribution fee for
the individual top and last sale data feed of the
BATS Exchanges is $5,000.00 per month. The
monthly External Distributor fee is $1,250 per
month for EDGX Top and EDGX Last Sale, free for
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Frm 00113
Fmt 4703
Sfmt 4703
Exchange believes that not charging
External Distributors a Distribution Fee
during their first three (3) months would
not impede a vendor from creating a
competing product. Specifically, a
vendor seeking to create the BATS One
Summary Feed could do so by
subscribing to EDGX Top, EDGX Last
Sale, EDGA Top, EDGA Last Sale, BZX
Top, BZX Last Sale, BYX Top and BYX
Last Sale, all of which are either free or
also include a New External Distributor
Credit identical to that proposed for the
BATS One Summary Feed. As a result,
a competing vendor would incur similar
costs as the Exchange in offering such
free period and offer a competing
product on a similar basis as the
Exchange.
The Exchange further believes that its
proposed monthly Data Consolidation
Fee would be pro-competitive because it
is identical to a similar fee charged by
the NYSE for its BQT feed and a vendor
could create a competing product,
perform a similar aggregating and
consolidating function, and similarly
charge for such service. The Exchange
notes that a competing vendor might
engage in a different analysis of
assessing the cost of a competing
product. The Exchanges believes that
the incremental cost to a particular
vendor for aggregation can be supported
by the vendor’s revenue opportunity
and may be inconsequential if such
vendor already has systems in place to
perform these functions as part of
creating its proprietary market data
products and is able to allocate these
costs over numerous products and
customer relationships. For these
reasons, the Exchange believes the
proposed pricing, including the New
External Distributor Fee Credit, would
enable a vendor to create a competing
product based on the individual data
feeds and charge its clients a fee that it
believes reflects the value of the
aggregation and consolidation function
that is competitive with BATS One Feed
pricing.
Finally, the Exchange notes that there
is already actual competition for
products similar to the BATS One Feed.
The NYSE offers BQT which provides
BBO and last sale information for the
NYSE, NYSE Arca Equities, Inc. and
NYSE MKT LLC.56 Nasdaq already
offers Nasdaq Basic, a filed market data
product, and through its affiliate, offers
NLS Plus which provides a unified view
EDGA Top and EDGA Last Sale, $1,250 for BYX
Top and BYX Last Sale (as proposed herein), and
$2,500 for BZX Top and BZX Last Sale. See SR–
EDGA–2015–09 and SR–EDGX–2015–09. See also
the BZX Fee Schedule available at https://
www.batstrading.com/support/fee_schedule/bzx/.
56 See supra note 53.
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Federal Register / Vol. 80, No. 36 / Tuesday, February 24, 2015 / Notices
of last sale information similar to the
BATS One Feed.57 The existence of
these competing data products
demonstrates that there is ample,
existing competition for products such
as the BATS One Feed and the fees
associated by such products is
constrained by competition.
In establishing the proposed fees, the
Exchange considered the
competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
users. The existence of alternatives to
the BATS One Feed, including the
existing underlying feeds, consolidated
data, and proprietary data from other
sources, ensures that the Exchange
cannot set unreasonable fees, or fees
that are unreasonably discriminatory,
when vendors and subscribers can elect
these alternatives or choose not to
purchase a specific proprietary data
product if its cost to purchase is not
justified by the returns any particular
vendor or subscriber would achieve
through the purchase.
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.
tkelley on DSK3SPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 58 and
paragraph (f)(2) of Rule 19b–4
thereunder.59 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.
59 17
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BYX–2015–09 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–BYX–2015–09. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule 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 BYX. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BYX–
2015–09 and should be submitted on or
before March 17, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.60
Brent J. Fields,
Secretary.
[FR Doc. 2015–03655 Filed 2–23–15; 8:45 am]
BILLING CODE 8011–01–P
57 Id.
58 15
Comments may be submitted by any of
the following methods:
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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60 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74295; File No. SR–EDGA–
2015–11]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 8.15
Entitled ‘‘Imposition of Fines for Minor
Violation(s) of Rules’’
February 18, 2015.
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 February
5, 2015, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it 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 Rule 8.15 entitled ‘‘Imposition of
Fines for Minor Violation(s) of Rules.’’
The text of the proposed rule change is
available at the Exchange’s Web site at
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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
2 17
CFR 200.30–3(a)(12).
Sfmt 4703
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]]>Agencies
[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9792-9801]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03655]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74284; File No. SR-BYX-2015-09]
Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Establish Fees
for the BATS One Feed, and Amend Fees for BYX Top and BYX Last Sale
February 18, 2015.
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 February 3, 2015, BATS Y-Exchange, Inc. (``BYX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the 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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend its fee schedule to
establish fees for the BATS One Feed, amend fees for BYX Top and BYX
Last Sale, add definitions for terms that apply to market data fees,
and make certain technical, non-substantive changes.
The text of the proposed rule change is available at the Exchange's
Web site at https://www.batstrading.com/, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
[[Page 9793]]
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 those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule to establish fees
for the BATS One Feed, amend fees for BYX Top and BYX Last Sale, add
definitions for terms that apply to market data fees, and make certain
technical, non-substantive changes.
Technical, Non-Substantive Changes
The Exchange proposes the following technical, non-substantive
amendments to its fee schedule regarding its existing market data fees.
The Exchange proposes to rename the section entitled ``BYX Exchange
PITCH Feed'' as the ``BYX Depth'', ``BYX Exchange Top Feed'' as ``BYX
Top'', ``BYX Exchange Last Sale Feed'' as ``BYX Last Sale'', ``BYX
Exchange Historical TOP'' as ``BYX Historical Top'', and ``Historical
PITCH'' as ``Historical Depth.'' The Exchange does not propose to amend
the content of these market data products; nor does the Exchange
propose to amend the fees for these products, other than for BYX Top
and BYX Last Sale as described below.
Definitions Applicable to Market Data Fees
The Exchange proposes to include in its fee schedule the following
defined terms that relate to the Exchange's market data fees. The
proposed definitions are designed to provide greater transparency with
regard to how the Exchange assesses fees for market data. The Exchange
notes that none of the proposed definitions are designed to amend any
fee, nor alter the manner in which it assesses fees.
First, the Exchange proposes to define a ``Distributor'' as ``any
entity that receives an Exchange Market Data product directly from the
Exchange or indirectly through another entity and then distributes it
internally or externally to a third party.'' \5\ In turn, an Internal
Distributor and External Distributor will be separately defined. An
Internal Distributor will be defined as a ``Distributor that receives
the Exchange Market Data product and then distributes that data to one
or more Users within the Distributor's own entity.'' \6\ An External
Distributor will be defined as a ``Distributor that receives the
Exchange Market Data product and then distributes that data to a third
party or one or more Users outside the Distributor's own entity.'' \7\
---------------------------------------------------------------------------
\5\ The proposed definition of ``Distributor'' is similar to
Nasdaq Rule 7047(d)(1).
\6\ The proposed definition of ``Internal Distributor'' is
similar to Nasdaq Rule 7047(d)(1)(A).
\7\ The proposed definition of ``External Distributor'' is
similar to Nasdaq Rule 7047(d)(1)(B).
---------------------------------------------------------------------------
Secondly, the Exchange proposes to add a definition of ``User'' to
its fee schedule. A User will be defined as a ``natural person, a
proprietorship, corporation, partnership, or entity, or device
(computer or other automated service), that is entitled to receive
Exchange data.'' For purposes of its market data fees, the Exchange
will distinguish between ``Non-Professional Users'' and ``Professional
Users.'' Specifically, a Non-Professional User will be defined as ``a
natural person who is not: (i) Registered or qualified in any capacity
with the Commission, the Commodity Futures Trading Commission, any
state securities agency, any securities exchange or association; any
commodities or futures contract market or association; (ii) engaged as
an ``investment adviser'' as that term is defined in Section 201(11) of
the Investment Advisers Act of 1940 (whether or not registered or
qualified under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal or state securities
laws to perform functions that will require registration or
qualification if such functions were performed for an organization not
so exempt.'' \8\ A Professional User will be defined as ``any User
other than a Non-Professional User.'' \9\
---------------------------------------------------------------------------
\8\ The proposed definition of ``Professional User'' is similar
to Nasdaq Rule 7047(d)(3)(A).
\9\ The proposed definition of ``Non-Professional User'' is
similar to Nasdaq Rule 7047(d)(3)(B).
---------------------------------------------------------------------------
BYX Top and BYX Last Sale
The cost of BYX Last Sale for an Internal Distributor is $500 per
month. Likewise, the cost of BYX Top for an Internal Distributor is
$500 per month. The Exchange does not charge per User fees for either
BYX Last Sale or BYX Top. Therefore, the Exchange does not require an
External Distributor of BYX Last Sale or BYX Top to count, classify
(e.g., professional or non-professional) or report to the Exchange
information regarding the customers to which they provide the data.
Instead, the Exchange currently charges an External Distributor of BYX
Last Sale a flat fee of $2,500 per month. The Exchange also currently
separately charges an External Distributor of BYX Top a flat fee of
$2,500 per month. End Users do not pay the Exchange for BYX Last Sale
or BYX Top, nor are end Users required to enter into contracts with the
Exchange.
The Exchange proposes to decrease the External Distributor Fee for
BYX Top and BYX Last Sale from $2,500 to $1,250 per month.\10\ The
Exchange also proposes to now allow subscribers to either BYX Top or
BYX Last Sale to also receive, upon request and at no additional cost,
BYX Last Sale or BYX Top, as applicable. The Exchange also proposes to
establish a New External Distributor Credit under which new External
Distributors of BYX Top or BYX Last Sale will not be charged a
Distributor Fee for their first three (3) months. The Exchange believes
that the proposed pricing model is simple and easy for data recipients
to comply with, and thus, will continue to result in a minimal
additional administrative burden for data recipients who elect to
receive both BYX Last Sale and BYX Top at no additional cost and at the
decreased External Distribution fees.
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\10\ End Users will continue to not pay the Exchange for BYX
Last Sale or BYX Top, nor will end Users be required to enter into
contracts with the Exchange.
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BATS One Feed
The Commission recently approved a proposed rule change by the
Exchange to establish a new market data product called the BATS One
Feed.\11\ The BATS One Feed is a data feed that disseminates, on a
real-time basis, the aggregate best bid and offer (``BBO'') of all
displayed orders for securities traded on BYX and its affiliated
exchanges \12\
[[Page 9794]]
and for which the BATS Exchanges report quotes under the Consolidated
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\13\ The BATS
One Feed also contains the individual last sale information for the
BATS Exchanges (collectively with the aggregate BBO, the ``BATS One
Summary Feed''). In addition, the BATS One Feed contains optional
functionality which will enable recipients to elect to receive
aggregated two-sided quotations from the BATS Exchanges for up to five
(5) price levels for all securities that are traded on the BATS
Exchanges in addition to the BATS One Summary Feed (``BATS One Premium
Feed''). For each price level on one of the BATS Exchanges, the BATS
One Premium Feed will include a two-sided quote and the number of
shares available to buy and sell at that particular price level.
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\11\ See Securities Exchange Act Release No. 73918 (December 23,
2014), 79 FR 78920 (December 31, 2014) (File Nos. SR-EDGX-2014-25;
SR-EDGA-2014-25; SR-BATS-2014-055; SR-BYX-2014-030) (Notice of
Amendments No. 2 and Order Granting Accelerated Approval to Proposed
Rule Changes, as Modified by Amendments Nos. 1 and 2, to Establish a
New Market Data Product called the BATS One Feed) (``BATS One
Approval Order'').
\12\ The Exchange's affiliated exchanges are EDGA Exchange, Inc.
(``EDGA''), EDGX Exchange, Inc. (``EDGX''), and BATS Exchange, Inc.
(``BZX'', together with EDGX, BZX, and BYX, the ``BATS Exchanges'').
On January 23, 2014, BATS Global Markets, Inc. (``BGMI''), the
former parent company of the Exchange and BYX, completed its
business combination with Direct Edge Holdings LLC, the parent
company of EDGA and EDGX. See Securities Exchange Act Release No.
71375 (January 23, 2014), 79 FR 4771 (January 29, 2014) (SR-BATS-
2013-059; SR-BYX-2013-039). Upon completion of the business
combination, DE Holdings and BGMI each became intermediate holding
companies, held under a single new holding company. The new holding
company, formerly named ``BATS Global Markets Holdings, Inc.,''
changed its name to ``BATS Global Markets, Inc.'' and BGMI changed
its name to ``BATS Global Markets Holdings, Inc.''
\13\ The Exchange understands that each of the BATS Exchanges
will separately file substantially similar proposed rule changes
with the Commission to implement fees for the BATS One Feed.
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The Exchange uses the following data feeds to create the BATS One
Summary Feed and the BATS One Premium Feed, each of which is available
to other vendors: EDGX Depth, EDGA Depth, BYX Depth, and BZX Depth, and
each of which have been previously published by the Commission.\14\ A
vendor that wishes to create a product like the BATS One Summary Feed
could instead subscribe to EDGX Top, EDGX Last Sale, EDGA Top, EDGA
Last Sale, BZX Top, BZX Last Sale, BYX Top, and BYX Last Sale.\15\ The
BATS Exchanges are the exclusive distributors of these individual data
feeds from which certain data elements are taken to create the BATS One
Feed as well as the feeds that a vendor may use to create a product
like the BATS One Summary Feed. By contrast, the Exchange would not be
the exclusive distributor of the aggregated and consolidated
information that comprises the BATS One Feed. Any entity that receives,
or elects to received [sic], the individual data feeds or the feeds
that may be used to create a product like the BATS One Feed would be
able to, if it so chooses, to create a data feed with the same
information included in the BATS One Feed and sell and distribute it to
its clients so that it could be received by those clients as quickly as
the BATS One Feed would be received by those same clients.\16\
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\14\ See Securities Exchange Act Release Nos. 66864 (April 26,
2012), 77 FR 26064 (May 2, 2012) (SR-EDGX-2012-14); 66863 (April 26,
2012), 77 FR 26059 (May 2, 2012) (SR-EDGA-2012-15); 69936 (July 3,
2013), 78 FR 41483 (July 10, 2013) (SR-BATS-2013-39); 69935 (July 3,
2013), 78 FR 47447 (July 10, 2013) (SR-BYX-2013-023). See EDGA Rule
13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and (c), and BYX Rule 11.22
(a) and (c) for a description of the depth of book feeds offered by
each of the BATS Exchanges.
\15\ See Securities Exchange Act Release Nos. 73990 (January 5,
2015) (SR-EDGA-2014-35) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Adopt Top and Last Sale
Data Feeds); 73989 (January 5, 2015) (SR-EDGX-2014-36) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Adopt
Top and Last Sale Data Feeds). See also BZX and BYX Rules 11.22(d)
and (g).
\16\ See BATS One Approval Order, supra note 11. The Exchange
notes that a vendor can obtain the underlying depth-of-book feeds as
well as EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX Top,
BZX Last Sale, BYX Top and BYX Last Sale on the same latency basis
as the Exchange would receive the underlying depth-of-book feeds
necessary to create the BATS One Feed, including the BATS One
Summary Feed. Id.
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The Exchange proposes to amend its fee schedule to incorporate fees
related to the BATS One Feed. The Exchange proposes to charge different
fees to vendors depending on whether the vendor elects to receive: (i)
the BATS One Summary Feed; or (ii) the optional BATS One Premium Feed.
These fees include the following, each of which are described in detail
below: (i) Distributor Fees; \17\ (ii) Usage Fees for both Professional
and Non-Professional Users; \18\ (iii) Enterprise Fees; \19\ and (iv) a
Data Consolidation Fee. The amount of each fee may differ depending on
whether they use the BATS One Feed data for internal or external
distribution. Vendors that distribute the BATS One Feed data both
internally and externally will be subject to the higher of the two
Distributor Fees.
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\17\ The Exchange notes that Distributor Fees as well as the
distinctions based on external versus internal distribution have
been previously filed with the Commission by Nasdaq, Nasdaq OMX BX,
and Nasdaq OMX PSX. See Nasdaq Rule 7019(b); see also Securities
Exchange Act Release No. 62876 (September 9, 2010), 75 FR 56624
(September 16, 2010) (SR-PHLX-2010-120); Securities Exchange Act
Release Nos. 62907 (September 14, 2010), 75 FR 57314 (September 20,
2010) (SR-NASDAQ-2010-110); 59582 (March 16, 2009), 74 FR 12423
(March 24, 2009) (Order approving SR-NASDAQ-2008-102); Securities
Exchange Act Release No. 63442 (December 6, 2010), 75 FR 77029
(December 10, 2010) (SR-BX-2010-081).
\18\ The Exchange notes that User fees as well as the
distinctions based on professional and non-professional users have
been previously filed with or approved by the Commission by Nasdaq
and the New York Stock Exchange, Inc. (``NYSE''). See Securities
Exchange Act Release Nos. 59582 (March 16, 2009), 74 FR 12423 (March
24, 2009) (Order approving SR-NASDAQ-2008-102).
\19\ The Exchange notes that Enterprise fees have been
previously filed with or approved by the Commission by Nasdaq, NYSE
and the CTA/CQ Plans. See Nasdaq Rule 7047. Securities Exchange Act
Release Nos. 71507 (February 7, 2014), 79 FR 8763 (February 13,
2014) (SR-NASDAQ-20140011); 70211 (August 15, 2013), 78 FR 51781
(August 21, 2013) (SR-NYSE-2013-58); 70010 (July 19, 2013) (File No.
SR-CTA/CQ-2013-04).
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Internal Distributor Fees. As proposed, each Internal Distributor
that receives only the BATS One Summary Feed shall pay a fee of $10,000
per month. The Exchange also proposes that each Internal Distributor
shall pay a fee of $15,000 per month where they elect to receive the
BATS One Premium Feed. The Exchange does not propose to charge any User
fees for the BATS One Feed where the data is received and subsequently
internally distributed to Professional or Non-Professional Users.
External Distributor Fees. The Exchange proposes to charge those
firms that distribute the BATS One Feed externally a fee of $5,000 per
month for the BATS One Summary Feed. As proposed, each External
Distributor shall pay a fee of $12,500 per month where they elect to
receive the BATS One Premium Feed.
The BATS One Feed is comprised of data included in EDGX Depth, EDGA
Depth, BYX Depth, and BZX Depth.\20\ Currently, an External Distributor
could create a competing product to the BATS One Premium Feed \21\ by
purchasing the [sic] each of these depth of book products from the
individual BATS Exchanges and then performing its own aggregation and
consolidation functions. The combined External Distributor fees for
these individual data feeds of the BATS Exchanges is $12,500 per
month,\22\ equal to the $12,500 per month External Distributor Fee
proposed for the BATS One Premium Feed. An External Distributor that
seeks to create a competing product to the BATS One Summary Feed could
instead subscribe to the following data feeds: EDGX Top, EDGX Last
Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top, and
BYX Last Sale,\23\ and then perform their own aggregation and
consolidation function. The combined External Distributor fees for
[[Page 9795]]
these individual data feeds of the BATS Exchanges is $5,000 per
month,\24\ equal to the $5,000 per month External Distributor Fee
proposed for the BATS One Summary Feed. To ensure that vendors could
compete with the Exchange by creating the same product as the BATS One
Feed and selling it to their clients, the Exchange proposes to charge
External Distributors an External Distributor fee that equals the
combined External Distributor fees for each of the individual feeds
listed above.
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\20\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and
(c), and BYX Rule 11.22 (a) and (c) for a description of the depth
of book feeds offered by each of the BATS Exchanges.
\21\ Like the Exchange, an External Distributor would also be
able to create a competing product to the BATS One Summary Feed from
the data received via EDGX Depth, EDGA Depth, BYX Depth, and BZX
Depth, without having to separately purchase the top and last sale
feeds from each of the BATS Exchanges.
\22\ The monthly External Distributor fee is $2,500 per month
for EDGX Depth, $2,500 per month for EDGA Depth, $2,500 for BYX
Depth, and $5,000 for BZX Depth.
\23\ See supra note 15. See also BATS Rule 11.22(d) and (g).
\24\ The monthly External Distributor fee is $1,250 per month
for EDGX Top and EDGX Last Sale, free for EDGA Top and EDGA Last
Sale, $1,250 for BYX Top and BYX Last Sale (as proposed herein), and
$2,500 for BZX Top and BZX Last Sale. See SR-EDGA-2015-09 and SR-
EDGX-2015-09. See also the BZX Fee Schedule available at https://www.batstrading.com/support/fee_schedule/bzx/.
---------------------------------------------------------------------------
The Exchange also proposes to establish a New External Distributor
Credit under which new External Distributors of the BATS One Summary
Feed will not be charged a Distributor Fee for their first three (3)
months in order to allow them to enlist new Users to receive the BATS
One Feed.\25\ The New External Distributor Fee Credit will not be
available to External Distributors of the BATS One Premium Feed. The
Exchange does not believe the New External Distributor Credit would
inhibit a vendor from creating a competing product and offer a similar
free period as the Exchange. Specifically, a vendor seeking to create
the BATS One Summary Feed could do so by subscribing to EDGX Top, EDGX
Last Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top
and BYX Last Sale, all of which are either free or also include a New
External Distributor Credit identical to that proposed for the BATS One
Summary Feed. As a result, a competing vendor would incur similar costs
as the Exchange in offering such free period for a competing product
and may do so on the same terms as the Exchange.
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\25\ The Exchange notes that just as a third party vendor could
choose to offer special pricing in order to incentivize data
recipients to perform necessary development and other work in order
to receive and distribute a new data product, the Exchange has
proposed pricing to incentivize data recipients to take and
distribute the BATS One Feed.
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User Fees
In addition to Internal and External Distributor Fees, the Exchange
proposes to charge those who receive the BATS One Feed from External
Distributors different fees for both their Professional Users and Non-
Professional Users. The Exchange will assess a monthly fee for
Professional Users of $10.00 per User for receipt of the BATS One
Summary Feed or $15.00 per User who elects to also receive the BATS One
Premium Feed. Non-Professional Users will be assessed a monthly fee of
$0.25 per user for the BATS One Summary Feed or $0.50 per user where
they elects to receive the BATS One Premium Feed.
External Distributors must count every Professional User and Non-
Professional User to which they provide BATS One Feed data. Thus, the
Distributor's count will include every person and device that accesses
the data regardless of the purpose for which the individual or device
uses the data.\26\ Distributors must report all Professional and Non-
Professional Users in accordance with the following:
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\26\ Requiring that every person or device to which they provide
the data is counted by the Distributor receiving the BATS One Feed
is similar to the NYSE Unit-of-Count Policy. The only difference is
that the NYSE Unit-of-Count Policy requires the counting of users
receiving a market data product through both internal and external
distribution. Because the Exchange proposes to charge Usage Fees
solely to recipient firms who's Users receive data from an external
distributor and not through internal distribution, it only requires
the counting of Users by Distributors that disseminate the BATS One
Feed externally.
---------------------------------------------------------------------------
In connection with an External Distributor's distribution
of the BATS One Feed, the Distributor should count as one User each
unique User that the Distributor has entitled to have access to the
BATS One Feed. However, where a device is dedicated specifically to a
single individual, the Distributor should count only the individual and
need not count the device.
The External Distributor should identify and report each
unique User. If a User uses the same unique method to gain access to
the BATS One Feed, the Distributor should count that as one User.
However, if a unique User uses multiple methods to gain access to the
BATS One Feed (e.g., a single User has multiple passwords and user
identifications), the External Distributor should report all of those
methods as an individual User.
External Distributors should report each unique individual
person who receives access through multiple devices as one User so long
as each device is dedicated specifically to that individual.
If an External Distributor entitles one or more
individuals to use the same device, the External Distributor should
include only the individuals, and not the device, in the count.
Each External Distributor will receive a credit against its monthly
Distributor Fee for the BATS One Feed equal to the amount of its
monthly Usage Fees up to a maximum of the Distributor Fee for the BATS
One Feed. For example, an External Distributor will be subject to a
$12,500 monthly Distributor Fee where they elect to receive the BATS
One Premium Feed. If that External Distributor reports User quantities
totaling $12,500 or more of monthly usage of the BATS One Premium Feed,
it will pay no net Distributor Fee, whereas if that same External
Distributor were to report User quantities totaling $11,500 of monthly
usage, it will pay a net of $1,000 for the Distributor Fee. External
Distributors will remain subject to the per User fees discussed above.
In every case the Exchange will receive at least $12,500 in connection
with the distribution of the BATS One Feed (through a combination of
the External Distribution Fee and per User Fees).
Enterprise Fee. The Exchange also proposes to establish a $50,000
per month Enterprise Fee that will permit a recipient firm who receives
the BATS Summary Feed portion of the BATS One Feed from an External
Distributor to receive the data for an unlimited number of Professional
and Non-Professional Users and $100,000 per month for recipient firms
who elect to receive the BATS One Premium Feed. For example, if a
recipient firm had 15,000 Professional Users who each receive the BATS
One Summary Feed portion of the BATS One Feed at $10.00 per month, then
that recipient firm will pay $150,000 per month in Professional Users
fees. Under the proposed Enterprise Fee, the recipient firm will pay a
flat fee of $50,000 for an unlimited number of Professional and Non-
Professional Users for the BATS Summary Feed portion of the BATS One
Feed. A recipient firm must pay a separate Enterprise Fee for each
External Distributor that controls display of the BATS One Feed if it
wishes such User to be covered by an Enterprise Fee rather than by per-
User fees. A recipient firms that pays the Enterprise Fee will not have
to report its number of such Users on a monthly basis. However, every
six months, a recipient firm must provide the Exchange with a count of
the total number of natural person users of each product, including
both Professional and Non-Professional Users. The Enterprise Fee would
be in addition to the applicable Distributor Fee.
Data Consolidation Fee
The Exchange also proposes to charge External Distributors of the
BATS One Feed a separate Data Consolidation Fee, which reflects the
value of the aggregation and consolidation function the Exchange
performs in creating the BATS One Feed. As stated above, the Exchange
creates the BATS One Feed
[[Page 9796]]
from data derived from the EDGX Depth, EDGA Depth, BYX Depth, and BZX
Depth.\27\ The Exchange notes that an External Distributor could create
a competing product to the BATS One Feed based on these individual data
feeds, or, alternatively, the applicable Top and Last Sale products
offered by the Exchanges, and could charge its clients a fee that it
believes reflects the value of the aggregation and consolidation
function. The Exchanges [sic] believes that the incremental cost to a
particular vendor for aggregation can be supported by the vendor's
revenue opportunity and may be inconsequential if such vendor already
has systems in place to perform these functions as part of creating its
proprietary market data products and is able to allocate these costs
over numerous products and customer relationships. For these reasons,
the Exchange believes that vendors could readily offer a product
similar to the BATS One Feed on a competitive basis at a similar cost.
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\27\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and
(c), and BYX Rule 11.22 (a) and (c) for a description of the depth
of book feeds offered by each of the BATS Exchanges.
---------------------------------------------------------------------------
The Exchange does not propose to charge Internal Distributors the
separate Data Consolidation Fee as the proposed Internal Distributor
Fees are greater than the cost of subscribing to each of the underlying
individual feed. As discussed above, each Internal Distributor that
receives only the BATS One Summary Feed shall pay a fee of $10,000 per
month, as compared to $5,000, which is the total of the underlying
feeds.\28\ Each Internal Distributor shall pay a fee of $15,000 per
month where they elect to receive the BATS One Premium Feed, as
compared to $12,500, which is the total cost of the underlying depth
feeds.\29\ The increased cost of the BATS One Feed is designed to
include the value of the aggregation and consolidation function the
Exchange performs in creating the BATS One Feed. Therefore, the
Exchange does not propose to charge Internal Distributors a separate
Data Consolidation Fee.
---------------------------------------------------------------------------
\28\ See supra note 24.
\29\ See supra note 22.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\30\ in general, and
furthers the objectives of Section 6(b)(4),\31\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and other persons using its
facilities. The Exchange believes that the proposed rates are equitable
and non-discriminatory in that they apply uniformly to all Members. The
Exchange believes the proposed fees are competitive with those charged
by other venues and, therefore, reasonable and equitably allocated to
Members.
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\30\ 15 U.S.C. 78f.
\31\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Technical, Non-Substantive Changes
The Exchange believes that the non-substantive changes to its fee
schedule are reasonable because they are non-substantive changes that
are designed to amend any fee, nor alter the manner in which it
assesses fees. These non-substantive, technical changes to the fee
schedule are intended to streamline the naming convention of the
Exchange's market data products, making the fee schedule clearer and
less confusing for investors, 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.
Definitions Applicable to Market Data Fees
The Exchange believes that the proposed definitions are reasonable
because they are designed to provide greater transparency to Members
with regard to how the Exchange assesses fees for market data. The
Exchange notes that none of the proposed definitions are designed to
amend any fee, nor alter the manner in which it assesses fees. The
Exchange believes that Members would benefit from clear guidance in its
fee schedule that describes the manner in which the Exchange would
assess fees. These definitions are 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. Lastly, the
proposed definitions are based on existing rules of the Nasdaq Stock
Market LLC (``Nasdaq'').\32\
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\32\ The proposed definition of ``Distributor'' is similar to
Nasdaq Rule 7047(d)(1). The proposed definition of ``Internal
Distributor'' is similar to Nasdaq Rule 7047(d)(1)(A). The proposed
definition of ``External Distributor'' is similar to Nasdaq Rule
7047(d)(1)(B). The proposed definition of ``Professional User'' is
similar to Nasdaq Rule 7047(d)(3)(A). The proposed definition of
``Non-Professional User'' is similar to Nasdaq Rule 7047(d)(3)(B).
---------------------------------------------------------------------------
BYX Top and BYX Last Sale
The Exchange believes that its amended fees for BYX Last Sale and
BYX Top are consistent with Section 6(b)(4) of the Act \33\ because
they provide for an equitable allocation of reasonable dues, fees, and
other charges among its members and other recipients of Exchange data.
The Exchange also believes the proposed fees for BYX Last Sale and BYX
Top are reasonable and equitable in light of the benefits to data
recipients. The Exchange believes that the decreased External
Distributor Fees for BYX Last Sale and BYX Top are equitable and
reasonable in that they result in a fee reduction for External
Distributors. Subscribers to either BYX Top or BYX Last Sale would be
able to also receive, upon request and at no additional cost, BYX Last
Sale or BYX Top, as applicable. The Exchange believes that the proposed
pricing model is simple and easy for data recipients to comply with,
and thus, will result in a minimal additional administrative burden for
data recipients who elect to receive both BYX Last Sale and BYX Top at
no additional cost. BYX Last Sale and BYX Top are distributed and
purchased on a voluntary basis, in that neither the Exchanges nor
market data distributors are required by any rule or regulation to make
this data available. Accordingly, Distributors and Users can
discontinue use at any time and for any reason, including due to an
assessment of the reasonableness of fees charged. Lastly, the Exchange
also believes that the proposed amendments to its fee schedule are
reasonable and non-discriminatory because it [sic] will apply uniformly
to all Members.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
BATS One Feed
The Exchange also believes that the proposed fees for the BATS One
Feed are consistent with Section 6(b) of the Act,\34\ in general, and
Section 6(b)(4) of the Act,\35\ in particular, in that it [sic] they
provide for an equitable allocation of reasonable fees among Users and
recipients of the data and are not designed to permit unfair
discrimination among customers, brokers, or dealers. The Exchange also
believes that the proposed rule change is consistent with Section 11(A)
of the Act \36\ in that it supports (i) fair competition among brokers
and dealers, among exchange markets, and between exchange markets and
markets other than exchange markets and (ii) the
[[Page 9797]]
availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities. Furthermore,
the proposed rule change is consistent with Rule 603 of Regulation
NMS,\37\ which provides that any national securities exchange that
distributes information with respect to quotations for or transactions
in an NMS stock do so on terms that are not unreasonably
discriminatory. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
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\34\ 15 U.S.C. 78f.
\35\ 15 U.S.C. 78f(b)(4).
\36\ 15 U.S.C. 78k-1.
\37\ See 17 CFR 242.603.
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In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors will be subject to the proposed fee structure on an equivalent
basis. The BATS One Feed would be distributed and purchased on a
voluntary basis, in that neither the BATS Exchanges nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. In addition, any customer that wishes
to purchase one or more of the individual data feeds offered by the
BATS Exchanges would be able to do so.
The Exchange has taken into consideration its affiliated
relationship with EDGA, EDGX, and BZX in its design of the BATS One
Feed to assure that vendors would be able to offer a similar product on
the same terms as the Exchange from a cost perspective. While the BATS
Exchanges are the exclusive distributors of the individual data feeds
from which certain data elements may be taken to create the BATS One
Feed, they are not the exclusive distributors of the aggregated and
consolidated information that comprises the BATS One Feed. Any entity
that receives, or elects to receive, the individual data feeds would be
able, if it so chooses, to create a data feed with the same information
included in the BATS One Feed and sell and distribute it to its clients
so that it could be received by those clients as quickly as the BATS
One Feed would be received by those same clients with no greater cost
than the Exchange.\38\
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\38\ See BATS One Approval Order, supra note 11. The Exchange
notes that a vendor can obtain the underlying depth-of-book feeds as
well as EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX Top,
BZX Last Sale, BYX Top and BYX Last Sale on the same latency basis
as the Exchange would receive the underlying depth-of-book feeds
necessary to create the BATS One Feed, including the BATS One
Summary Feed. Id.
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In addition, vendors and subscribers that do not wish to purchase
the BATS One Feed may separately purchase the individual underlying
products, and if they so choose, perform a similar aggregation and
consolidation function that the Exchange performs in creating the BATS
One Feed. To enable such competition, the Exchange is offering the BATS
One Feed on terms that a subscriber of those underlying feeds could
offer a competing product if it so chooses.
The Exchange notes that the use of the BATS One Feed is entirely
optional. Firms have a wide variety of alternative market data products
from which to choose, including the Exchanges' own underlying data
products, the Nasdaq and the NYSE proprietary data products described
in this filing,\39\ and consolidated data. Moreover, the Exchange is
not required to make any proprietary data products available or to
offer any specific pricing alternatives to any customers.
---------------------------------------------------------------------------
\39\ See infra note 53.
---------------------------------------------------------------------------
In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in the Exchange's
Statement on Burden on Competition, the existence of alternatives to
the BATS One Feed further ensures that the Exchange cannot set
unreasonable fees, or fees that are unreasonably discriminatory, when
vendors and subscribers can elect such alternatives. That is, the
Exchange competes with other exchanges (and their affiliates) that
provide similar market data products. If another exchange (or its
affiliate) were to charge less to consolidate and distribute its
similar product than the Exchange charges to consolidate and distribute
the BATS One Feed, prospective Users likely would not subscribe to, or
would cease subscribing to, the BATS One Feed. In addition, the
Exchange would compete with unaffiliated market data vendors who would
be in a position to consolidate and distribute the same data that
comprises the BATS One Feed into the vendor's own comparable market
data product. If the third-party vendor is able to provide the exact
same data for a lower cost, prospective Users would avail themselves of
that lower cost and elect not to take the BATS One Feed.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or ratemaking approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\40\
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\40\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's Web site at https://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).
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For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.
User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for the BATS One Feed is reasonable
because it will make the product more affordable and result in greater
availability to Professional and Non-Professional Users. Moreover,
introducing a modest Non-Professional User fee for the BATS One Feed is
reasonable because it provides an additional method for retail
investors to access the BATS One Feed data by providing the same data
that is available to Professional Users. The Exchange believes that the
proposed fees are equitable and not unfairly discriminatory because
they will be charged uniformly to recipient firms and Users. The fee
structure of differentiated Professional and Non-Professional fees has
long been used by other exchanges for their proprietary data products,
and by the Nasdaq UTP and the CTA and CQ Plans in order to reduce the
price of data to retail investors and make it more broadly
[[Page 9798]]
available.\41\ Offering the BATS One Feed to Non-Professional Users
with the same data available to Professional Users results in greater
equity among data recipients.
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\41\ See, e.g., Securities Exchange Act Release No. 20002, File
No. S7-433 (July 22, 1983) (establishing nonprofessional fees for
CTA data); Nasdaq Rules 7023(b), 7047.
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In addition, the proposed fees are reasonable when compared to fees
for comparable products offered by the NYSE, Nasdaq, and under the CTA
and CQ Plans. Specifically, Nasdaq offers Nasdaq Basic, which includes
best bid and offer and last sale data for Nasdaq and the FINRA/Nasdaq
TRF, for a monthly fee of $26 per professional subscriber and $1 per
non-professional subscriber; alternatively, a broker-dealer may
purchase an enterprise license at a rate of $350,000 per month for
internal distribution to an unlimited number of professional users or
$365,000 per month for external distribution for up to 16,000
professional users, plus $2 for each additional professional user over
16,000.\42\ The NYSE offers BQT, which provides BBO and last sale
information for the NYSE, NYSE Arca, and NYSE MKT. To obtain BQT,
subscribers must purchase the [sic] each underlying data feed for a
monthly fee of $18 per professional subscriber and $1 per non-
professional subscriber; alternatively, a broker-dealer may purchase an
enterprise license at a rate of $365,000 per month for an unlimited
number of professional users. The NYSE does not offer an enterprise
license for non-professional users. The Exchange's proposed per-User
Fees are lower than the NYSE's and Nasdaq's fees. In addition, the
Exchange is proposing Professional and Non-Professional User fees and
Enterprise Fees that are less than the fees currently charged by the
CTA and CQ Plans. Under the CTA and CQ Plans, Tape A consolidated last
sale and bid-ask data are offered together for a monthly fee of $20-$50
per device, depending on the number of professional subscribers, and
$1.00 per non-professional subscriber, depending on the number of non-
professional subscribers.\43\ A monthly enterprise fee of $686,400 is
available under which a U.S. registered broker-dealer may distribute
data to an unlimited number of its own employees and its non-
professional subscriber brokerage account customers. Finally, in
contrast to Nasdaq UTP and the CTA and CQ Plans, the Exchange also will
permit enterprise distribution by a non-broker-dealer.
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\42\ See Nasdaq Rule 7047.
\43\ See CTA Plan dated September 9, 2013 and CQ Plan dated
September 9, 2013, available at https://cta.nyxdata.com/CTA.
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Enterprise Fee. The proposed Enterprise Fee for the BATS One Feed
is reasonable as the fee proposed is less than the enterprise fees
currently charged for underlying data feeds for NYSE BQT, Nasdaq Basic,
and consolidated data distributed under the Nasdaq UTP and the CTA and
CQ Plans. In addition, the Enterprise Fee could result in a fee
reduction for recipient firms with a large number of Professional and
Non-Professional Users. If a recipient firm has a smaller number of
Professional Users of the BATS One Feed, then it may continue using the
per User structure and benefit from the per User Fee reductions. By
reducing prices for recipient firms with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute the BATS One Feed, thereby
expanding the distribution of this market data for the benefit of
investors.
The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large numbers of Professional and Non-Professional Users.
Firms that pay the proposed Enterprise Fee will not have to report the
number of Users on a monthly basis as they currently do, but rather
will only have to count natural person users every six months, which is
a significant reduction in administrative burden. Finally, the Exchange
believes that it is equitable and not unfairly discriminatory to
establish an Enterprise Fee because it reduces the Exchange's costs and
the Distributor's administrative burdens in tracking and auditing large
numbers of users.
Distributor Fee. The Exchange believes that the proposed
Distributor Fees are also reasonable, equitably allocated, and not
unreasonably discriminatory. The fees for Members and non-Members are
uniform except with respect to reasonable distinctions with respect to
internal and external distribution.\44\ The Exchange believes that the
Distributor Fees for the BATS One Feed are reasonable and fair in light
of alternatives offered by other market centers. First, although the
Internal Distributor fee is higher than those of competitor products,
there are no User fees assessed for Users that receive the BATS One
Feed data through an Internal Distributor, which results in a net cost
that is lower than competitor products for many data recipients and
will be easier to administer.
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\44\ The Exchange notes that distinctions based on external
versus internal distribution have been previously filed with the
Commission by Nasdaq, Nasdaq OMX BX, and Nasdaq OMX PSX. See Nasdaq
Rule 019(b); see also Securities Exchange Act Release No. 62876
(September 9, 2010), 75 FR 56624 (September 16, 2010) (SR-PHLX-2010-
120); Securities Exchange Act Release No. 62907 (September 14,
2010), 75 FR 57314 (September 20, 2010) (SR-NASDAQ-2010-110);
Securities Exchange Act Release No. 63442 (December 6, 2010), 75 FR
77029 (December 10, 2010) (SR-BX-2010-081).
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The proposed Distributor Fees for the BATS One Feed are also
designed to ensure that vendors could compete with the Exchange by
creating a similar product as the BATS One Feed. The Exchange believes
that the proposed Distributor Fees are equitable and reasonable as it
[sic] equals the combined fee of subscribing to each individual data
feed of the BATS Exchanges, which have been previously published by the
Commission.\45\ Currently, an External Distributor that seeks to create
a competing product to the BATS One Premium Feed \46\ would need to
purchase each of the depth of book products from the individual BATS
Exchanges and then perform its own aggregation and consolidation
functions.\47\ The combined external distributor fees for these
individual depth of book feeds of the BATS Exchanges is $12,500 per
month,\48\ equal to the $12,500 per month External Distributor Fee
proposed for the BATS One Premium Feed. An External Distributor that
seeks to create a competing product to the BATS One Summary Feed could
alternatively subscribe to EDGX Top, EDGX Last Sale, EDGA Top, EDGA
Last Sale, BZX Top, BZX Last Sale, BYX Top, and BYX Last Sale, and then
perform their own aggregation and consolidation function. The combined
external distributor fees for these individual data feeds of the BATS
Exchanges is $5,000 per month,\49\ equal to the $5,000 per month
External Distributor Fee proposed for the BATS One Summary Feed. In
addition, the Exchange believes it is reasonable to not charge External
Distributors a Distribution Fee during their first three (3) months and
does not believe this would inhibit a vendor from creating a competing
product and offer a similar
[[Page 9799]]
free period as the Exchange. Specifically, a vendor seeking to create
the BATS One Summary Feed could do so by subscribing to EDGX Top, EDGX
Last Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top
and BYX Last Sale, all of which are either free or also include a New
External Distributor Credit identical to that proposed for the BATS One
Summary Feed. As a result, a competing vendor would incur similar costs
as the Exchange in offering such free period for a competing product
and may do so on the same terms as the Exchange.
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\45\ See supra notes 14 and 15.
\46\ Like the Exchange, an External Distributor would also be
able to create a competing product to the BATS One Summary Feed from
the data received via EDGX Depth, EDGA Depth, BYX Depth, and BZX
Depth, without having to separately purchase the top and last sale
feeds from each of the BATS Exchanges.
\47\ As discussed, the Exchange proposes to charge External
Distributors a separate Data Consolidation Fee to reflect the value
of the consolidation function performed by the Exchange.
\48\ See supra note 22.
\49\ See supra note 24.
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Data Consolidation Fee
The Exchange believes that the proposed $1,000 per month Data
Consolidation Fee charged to External Distributors who receive the BATS
One Feed is reasonable because it represents the value of the data
aggregation and consolidation function that the Exchange performs. The
Exchange also notes that its proposed $1,000 per month Data
Consolidation Fee is identical to an access fee charged by the NYSE for
BQT, which is also designed to represent the value of the data
aggregation function provided by the NYSE in constructing its BQT
feed.\50\
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\50\ See Securities Exchange Act Release No. 73816 (December 11,
2014), 79 FR 75200 (December 17, 2014) (SR-NYSE-2014-64) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to
Establish an Access Fee for the NYSE Best Quote and Trades Data
Feed, Operative December 1, 2014).
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The Exchange further believes the proposed Data Consolidation Fee
is not designed to permit unfair discrimination because all External
Distributors who subscribe to the BATS One Feed will be charged the
same fee. The Exchange believes it is reasonable and not unfairly
discriminatory to not charge Internal Distributors a separate Data
Consolidation Fee as the proposed Internal Distributor Fees are greater
than the cost of subscribing to each of the underlying individual feed.
As discussed above, each Internal Distributor that receives only the
BATS One Summary Feed shall pay a fee of $10,000 per month as compared
to $5,000, which is the total of the underlying feeds.\51\ Each
Internal Distributor shall pay a fee of $15,000 per month where they
elect to receive the BATS One Premium Feed as compared to $12,500,
which is the total cost of the underlying depth feeds.\52\ The
increased cost of the BATS One Feed is designed to include the value of
the aggregation and consolidation function the Exchange performs in
creating the BATS One Feed. Therefore, the Exchange believes the
proposed application of the Data Consolidation Fee is reasonable and
would not permit unfair discrimination.
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\51\ See supra note 24.
\52\ See supra note 22.
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In addition, a vendor could create a competing product based on the
individual data feeds and charge its clients a fee that it believes
reflects the value of the aggregation and consolidation function that
is competitive with the BATS One Feed pricing. The Exchanges believes
that the incremental cost to a particular vendor for aggregation can be
supported by the vendor's revenue opportunity and may be
inconsequential if such vendor already has systems in place to perform
these functions as part of creating its proprietary market data
products and is able to allocate these costs over numerous products and
customer relationships. Therefore, the Exchange believes the proposed
pricing would enable a vendor to create a competing product based on
the individual data feeds and charge its clients a fee that it believes
reflects the value of the aggregation and consolidation function that
is competitive with BATS One Feed pricing as discussed further below.
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.
Technical, Non-Substantive Changes
The proposed name changes to the Exchange's market data products
will not result in any burden on competition. The proposed amendments
are not designed to address any competitive issues, but rather provide
consistency amongst the naming conventions used for the Exchange market
data products, resulting in additional clarity and transparency to
Members, Users, and the investing public regarding the Exchange's
market data products. The Exchange notes that none of the proposed non-
substantive changes are designed to amend any fee, nor alter the manner
in which it assesses fees. These non-substantive, technical changes to
the fee schedule are intended to make the fee schedule clearer and less
confusing for investors and eliminate potential investor confusion.
Definitions Applicable to Market Data Fees
The proposed definitions applicable to market data fees will not
result in any burden on competition. The proposed definitions are not
designed to amend any fee, nor alter the manner in which it assesses
fees. The Exchange believes that Members would benefit from clear
guidance in its fee schedule that describes the manner in which the
Exchange would assess fees for market data. These definitions are
intended to make the Fee Schedule clearer and less confusing for
investors and are not designed to have a competitive impact.
BYX Top and BYX Last Sale
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's ability to price BYX Last Sale and BYX Top are constrained
by: (i) Competition among exchanges, other trading platforms, and Trade
Reporting Facilities (``TRF'') that compete with each other in a
variety of dimensions; (ii) the existence of inexpensive real-time
consolidated data and market-specific data and free delayed data; and
(iii) the inherent contestability of the market for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
In addition, BYX Last Sale and BYX Top compete with a number of
alternative products. For instance, BYX Last Sale and BYX Top do not
provide a complete picture of all trading activity in a security.
Rather, the other national securities exchanges, the several TRFs of
FINRA, and Electronic Communication Networks (``ECN'') that produce
proprietary data all produce trades and trade reports. Each is
currently permitted to produce last sale information products, and many
currently do, including Nasdaq and NYSE. In addition, market
participants can gain access to BYX last sale prices and top-of-book
quotations though integrated with the prices of other markets on feeds
made available through the SIPs.
In sum, the availability of a variety of alternative sources of
information imposes significant competitive pressures on Exchange data
products and the Exchange's compelling need to
[[Page 9800]]
attract order flow imposes significant competitive pressure on the
Exchange to act equitably, fairly, and reasonably in setting the
proposed data product fees. The proposed data product fees are, in
part, responses to that pressure. The Exchange believes that the
proposed fees would reflect an equitable allocation of its overall
costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish fair, reasonable, and not
unreasonably discriminatory fees and an equitable allocation of fees
among all Users. The existence of alternatives to BYX Last Sale and BYX
Top, including existing similar feeds by other exchanges, consolidated
data, and proprietary data from other sources, ensures that the
Exchange cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and subscribers can elect these
alternatives or choose not to purchase a specific proprietary data
product if its cost to purchase is not justified by the returns any
particular vendor or subscriber would achieve through the purchase.
BATS One Feed
The BATS One Feed will enhance competition because it not only
provides content that is competitive with the similar products offered
by other exchanges, but will provide pricing that is competitive as
well. The BATS One Feed provides investors with an alternative option
for receiving market data and competes directly with similar market
data products currently offered by the NYSE and Nasdaq.\53\ As
previously stated, the fees for the BATS One Feed are significantly
lower than alternative exchange products. The BATS One Feed is less
expensive per professional user and more than 85% less expensive for an
enterprise license for professional users (50% less for non-
professional users) when compared to a similar competitor exchange
product, offering firms a lower cost alternative for similar content.
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\53\ See Nasdaq Basic, https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market
center, as well as trades reported to the FINRA/Nasdaq Trade
Reporting Facility (``TRF'')); Nasdaq NLS Plus, https://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8,
2014) (data feed providing last sale data as well as consolidated
volume from the following Nasdaq OMX markets for U.S. exchange-
listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and
Nasdaq OMX PSX); Securities Exchange Act Release No. 73553 (November
6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) (Notice
of Amendment No. 1 and Order Granting Accelerated Approval to a
Proposed Rule Change, as Modified by Amendment No.1, To Establish
the NYSE Best Quote & Trades (``BQT'') Data Feed); https://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades (last
visited May 27, 2014) (data feed providing unified view of BBO and
last sale information for the NYSE, NYSE Arca, and NYSE MKT).
---------------------------------------------------------------------------
Although the BATS Exchanges are the exclusive distributors of the
individual data feeds from which certain data elements would be taken
to create the BATS One Feed, the Exchange would not be the exclusive
distributor of the aggregated and consolidated information that would
compose the proposed BATS One Feed. Any entity that receives, or elects
to received, the underlying data feeds would be able to, if it so
chooses, to create a data feed with the same information included in
the BATS One Feed and sell and distribute it to its clients so that it
could be received by those clients as quickly as the BATS One Feed
would be received by those same clients at a similar cost.\54\
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\54\ See BATS One Approval Order, supra note 11.
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The proposed pricing the Exchange would charge clients for the BATS
One Feed compared to the cost of the individual data feeds from the
BATS Exchanges would enable a vendor to receive the underlying data
feeds and offer a similar product on a competitive basis and with no
greater cost than the Exchange. The pricing the Exchange would charge
for the BATS One Feed would not be lower than the cost to a vendor of
receiving the underlying data feeds. The pricing the Exchange would
charge clients for the BATS One Feed compared to the cost of the
individual data feeds from the BATS Exchanges would enable a vendor to
receive the underlying data feeds and offer a similar product on a
competitive basis and with no greater cost than the Exchange. The
Distributor Fees that the Exchange intends to propose for the BATS One
Feed would not be less than the combined fee of subscribing to each
individual data feed.\55\ In addition, the Exchange believes that not
charging External Distributors a Distribution Fee during their first
three (3) months would not impede a vendor from creating a competing
product. Specifically, a vendor seeking to create the BATS One Summary
Feed could do so by subscribing to EDGX Top, EDGX Last Sale, EDGA Top,
EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top and BYX Last Sale, all
of which are either free or also include a New External Distributor
Credit identical to that proposed for the BATS One Summary Feed. As a
result, a competing vendor would incur similar costs as the Exchange in
offering such free period and offer a competing product on a similar
basis as the Exchange.
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\55\ The combined external distribution fee for the individual
depth of book data feeds of the BATS Exchanges is $12,500.00 per
month. The monthly External Distributor fee is $2,500 per month for
the EDGX Depth, $2,500 per month for the EDGA Depth, $2,500 for BYX
Depth, and $5,000 for BZX Depth. The combined external distribution
fee for the individual top and last sale data feed of the BATS
Exchanges is $5,000.00 per month. The monthly External Distributor
fee is $1,250 per month for EDGX Top and EDGX Last Sale, free for
EDGA Top and EDGA Last Sale, $1,250 for BYX Top and BYX Last Sale
(as proposed herein), and $2,500 for BZX Top and BZX Last Sale. See
SR-EDGA-2015-09 and SR-EDGX-2015-09. See also the BZX Fee Schedule
available at https://www.batstrading.com/support/fee_schedule/bzx/.
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The Exchange further believes that its proposed monthly Data
Consolidation Fee would be pro-competitive because it is identical to a
similar fee charged by the NYSE for its BQT feed and a vendor could
create a competing product, perform a similar aggregating and
consolidating function, and similarly charge for such service. The
Exchange notes that a competing vendor might engage in a different
analysis of assessing the cost of a competing product. The Exchanges
believes that the incremental cost to a particular vendor for
aggregation can be supported by the vendor's revenue opportunity and
may be inconsequential if such vendor already has systems in place to
perform these functions as part of creating its proprietary market data
products and is able to allocate these costs over numerous products and
customer relationships. For these reasons, the Exchange believes the
proposed pricing, including the New External Distributor Fee Credit,
would enable a vendor to create a competing product based on the
individual data feeds and charge its clients a fee that it believes
reflects the value of the aggregation and consolidation function that
is competitive with BATS One Feed pricing.
Finally, the Exchange notes that there is already actual
competition for products similar to the BATS One Feed. The NYSE offers
BQT which provides BBO and last sale information for the NYSE, NYSE
Arca Equities, Inc. and NYSE MKT LLC.\56\ Nasdaq already offers Nasdaq
Basic, a filed market data product, and through its affiliate, offers
NLS Plus which provides a unified view
[[Page 9801]]
of last sale information similar to the BATS One Feed.\57\ The
existence of these competing data products demonstrates that there is
ample, existing competition for products such as the BATS One Feed and
the fees associated by such products is constrained by competition.
---------------------------------------------------------------------------
\56\ See supra note 53.
\57\ Id.
---------------------------------------------------------------------------
In establishing the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish fair, reasonable, and not unreasonably
discriminatory fees and an equitable allocation of fees among all
users. The existence of alternatives to the BATS One Feed, including
the existing underlying feeds, consolidated data, and proprietary data
from other sources, ensures that the Exchange cannot set unreasonable
fees, or fees that are unreasonably discriminatory, when vendors and
subscribers can elect these alternatives or choose not to purchase a
specific proprietary data product if its cost to purchase is not
justified by the returns any particular vendor or subscriber would
achieve through the purchase.
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)(ii) of the Act \58\ and paragraph (f)(2) of Rule 19b-4
thereunder.\59\ 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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\58\ 15 U.S.C. 78s(b)(3)(A)(ii).
\59\ 17 CFR 240.19b-4(f)(2).
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BYX-2015-09 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-BYX-2015-09. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule 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 BYX. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-BYX-2015-09 and should be
submitted on or before March 17, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\60\
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\60\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03655 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P
