Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc., 10735-10738 [2015-04068]

Download as PDF Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices NASD Rule 3170 (Mandatory Electronic Filing Requirements), NASD Rule 1150 (Executive Representative), and NASD Rule 1160 (Contact Information Requirements) into the Consolidated FINRA rulebook as FINRA Rule 4517 (Member Filing and Contact Information Requirements) without any substantive changes, to update cross-references accordingly and reflect current nomenclature, and to thereby clarify FINRA’s rules, and because the rulebook consolidation process is designed to provide additional clarity and regulatory efficiency to members, the Commission believes that a waiver of the requirement is appropriate so that the rule change may become operative immediately. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal effective upon filing.14 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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– FINRA–2015–004 on the subject line. 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 such filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA– 2015–004, and should be submitted on or before March 20, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–04084 Filed 2–26–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74352; File No. SR–BATS– 2015–13] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. mstockstill on DSK4VPTVN1PROD with NOTICES Paper Comments February 23, 2015. • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–FINRA–2015–004. 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, 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 10, 2015, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The 14 For purposes of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 18:05 Feb 26, 2015 Jkt 235001 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 10735 Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-members of the Exchange pursuant to BATS Rules 15.1(a) and (c). Changes to the fee schedule pursuant to this proposal are effective upon filing. The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify its fee schedule in order to: (1) remove the reference to ROLF from fee code BO; (2) make certain changes to Cross-Asset Step-Up Tier 3; and (3) make certain non-substantive clean-up changes to the fee schedule. Deleting Reference to ROLF The Exchange proposes to amend its fee schedule to remove the reference to 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 4 17 E:\FR\FM\27FEN1.SGM 27FEN1 10736 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices ROLF from fee code BO. Fee code BO currently provides that the Exchange will charge $0.0030 per share for any order routed using ROLF or Destination Specific routing strategy unless otherwise specified. Under the ROLF routing strategy, an order will check the Exchange for available shares and then will be sent to LavaFlow ECN (‘‘LavaFlow’’). This change is being proposed in response to LavaFlow’s announcement that it will cease market operations and its last day of trading will be Friday, January 30, 2015. As such, beginning on February 2, 2015, the Exchange will no longer route orders to LavaFlow. As proposed, the Exchange would continue to charge $0.0030 per share for orders routed using a Destination Specific routing strategy. mstockstill on DSK4VPTVN1PROD with NOTICES Step-Up Add TCV Definition The Exchange is also proposing to make a non-substantive change to the definition of ‘‘Step-Up Add TCV’’ in its fee schedule. Currently, Step-Up Add TCV means ADAV 6 as a percentage of TCV 7 in January 2014 subtracted from current ADAV as a percentage of TCV. In order to add an additional month to use as a baseline for calculating Step-Up Add TCV, as further described below, the Exchange is proposing to amend the fee schedule such that Step-Up Add TCV means ADAV as a percentage of TCV in the relevant baseline month subtracted from current ADAV as a percentage of TCV. The Exchange is also proposing to make a corresponding nonsubstantive change to footnote 2, titled ‘‘Step-Up Tiers,’’ such that the criteria to qualify for the tiers is described as the ‘‘Member’s Step-Up TCV from January 2014 is equal to or greater than’’ instead of ‘‘Member’s Step-Up TCV is equal to or greater than.’’ This change is nonsubstantive because the Exchange is not proposing to amend any fees, rebates, or the calculation thereof, but rather making the requisite change in order for the rebate and the criteria associated with meeting the tiers to remain the same in conjunction with the proposed changes to the definition of Step-Up Add TCV outlined above. to make two changes: to base the tier calculation on a Member’s Step-Up Add TCV from December 2014; and to lower the threshold required to meet Tier 3 from 0.20% to 0.15%. Currently, in order to meet Tier 3 of the Cross-Asset Step-Up Tier and receive a $0.0032 rebate per share that adds liquidity: (i) a Member’s ADAV as a percentage of TCV must be equal to or greater than 0.20%; and (ii) the Member’s Options Step-Up Add TCV 8 must be equal to or greater than 0.60%. The Exchange is not proposing to amend requirement (ii). The Exchange is proposing to amend requirement (i) such that a Member must have a Step-Up Add TCV from December 2014 of at least 0.15% instead of an ADAV as a percentage of TCV of at least 0.20%, which will encourage increased participation on the Exchange by requiring that a Member increases its participation on the Exchange as compared to December 2014, rather than maintaining a static ADAV as a percentage of TCV. The Exchange proposes to implement the amendments to its fee schedule effective February 10, 2015. Cross-Asset Step-Up Tiers The Exchange is also proposing to amend the criteria for meeting Tier 3 in the Cross-Asset Step-Up Tiers. Specifically, the Exchange is proposing 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.9 Specifically, the Exchange believes that the proposed rule change is consistent with Sections 6(b)(4) of the Act and 6(b)(5) of the Act,10 in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive. The Exchange believes that its proposal to eliminate ROLF from fee code BO represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. The proposed change is in response to LavaFlow’s announcement that it will 6 ‘‘ADAV’’ means average daily volume calculated as the number of shares added per day on a monthly basis. 7 ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. 8 ‘‘Options Step-Up Add TCV’’ means ADAV as a percentage of TCV in January 2014 subtracted from current ADAV as a percentage of TCV, using the definitions of ADAV and TCV as provided under the Exchange’s fee schedule for BATS Options. 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:05 Feb 26, 2015 Jkt 235001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 cease market operations and its last day of trading will be Friday, January 30, 2015. The Exchange notes that the proposed change is not designed to amend any fee or rebate, nor alter the manner in which the Exchange assesses fees and rebates. As of February 2, 2015, the Exchange will no longer route orders to LavaFlow and, therefore, proposes to remove ROLF from the fee schedule, which will make the fee schedule clearer and less confusing for investors as well as help to 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. The Exchange also believes that the proposed non-substantive change to the definition of Step-Up Add TCV and the corresponding non-substantive change to the Step-Up Tiers are reasonable, fair, and equitable because they are designed to make the fee schedule easier to comprehend in light of the decision to add an additional baseline month, as described above. The Exchange notes that neither of the proposed changes are designed to amend any fee or rebate, nor alter the manner in which the Exchange assesses fees and rebates. These nonsubstantive changes to the fee schedule 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. The Exchange also believes that the proposed change to measure the Member’s Step-Up Add TCV from December 2014 instead of ADAV as a percentage of TCV is reasonable, fair, and equitable because it will incentive Members to increase their participation on the Exchange as compared to December 2014, rather than maintaining a static ADAV as a percentage of TCV. The Exchange further believes that the proposal is reasonable, fair, and equitable because the increased liquidity from incentivizing Members to increase their participation on the Exchange will benefit all investors by deepening the liquidity pool on the Exchange, supporting the quality of price discovery, promoting market transparency, and improving investor protection. The Exchange also believes that lowering the threshold to meet the requirement from 0.20% to 0.15% is reasonable, fair, and equitable because the measurement is changing from a measure of total added volume (ADAV E:\FR\FM\27FEN1.SGM 27FEN1 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES as a percentage of TCV) into a measure of the increase of added volume as compared to December 2014 (Step-Up Add TCV from December 2014) and the reduction will make it easier for Members to achieve Cross-Asset StepUp Tier 3. The Exchange believes that step-up pricing programs such as that proposed herein reward a Member’s growth pattern and that such increased volume increases the potential revenue to the Exchange, which will allow the Exchange to continue to provide and potentially expand the incentive programs operated by the Exchange. Such pricing programs are also fair and equitable in that they are available to all Members. Further, volume-based rebates and fees such as the ones maintained by the Exchange, including those amendments proposed herein, have been widely adopted by equities and options exchanges and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to the value to an exchange’s market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and introduction of higher volumes of orders into the price and volume discovery processes. Further, the Exchange believes that the Cross-Asset Step-Up Tiers will provide such enhancements in market quality on the Exchange by incentivizing increased participation by Members attempting to meet Tier 3. Accordingly, the Exchange believes that the proposed amendments to the Cross-Asset Step-Up Tiers and the incentives associated therewith are not unfairly discriminatory because they will apply uniformly to all Members and are consistent with the overall goals of enhancing market quality on the Exchange. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. To the contrary, the Exchange believes that the proposed changes to the CrossAsset Step-Up Tiers will allow the Exchange to compete more ably with other execution venues by drawing additional volume to the Exchange, thereby making it a more desirable destination venue for its customers. Further, the Exchange does not believe that these proposed changes represent a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange’s competitors. Additionally, Members VerDate Sep<11>2014 18:05 Feb 26, 2015 Jkt 235001 may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange also believes that its proposal to remove ROLF from fee code BO would not affect intermarket nor intramarket competition because the change is not designed to amend any fee or rebate or to alter the manner in which the Exchange assesses fees or calculates rebates. It is simply proposed in response to LavaFlow’s announcement that it will cease market operations following the close of business on Friday, January 30, 2015. The Exchange believes that the nonsubstantive and organizational changes to the fee schedule would not affect intermarket nor intramarket competition because none of the proposed changes are designed to amend any fee or rebate or to alter the manner in which the Exchange asses fees or rebates. The changes are intended to make the fee schedule as clear and concise as possible. As stated above, the Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee structures to be unreasonable or excessive. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and paragraph (f)(2) of Rule 19b–4 thereunder.12 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. If the Commission takes such action, the Commission shall institute proceedings 11 15 12 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). Frm 00078 Fmt 4703 Sfmt 4703 10737 to determine whether the proposed rule should be approved or disapproved. 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– BATS–2015–13 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BATS–2015–13. 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BATS– 2015–13 and should be submitted on or before March 20, 2015. E:\FR\FM\27FEN1.SGM 27FEN1 10738 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–04068 Filed 2–26–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74351; File No. SR–CBOE– 2015–021] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Chicago Board Options Exchange, Incorporated’s Order Handling System and Order Management Terminal February 23, 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 19, 2015, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. mstockstill on DSK4VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to adopt a rule that further describes its existing order handling system (also referred to below as ‘‘OHS’’) and order management terminal (also referred to below as ‘‘OMT’’) operations, and to make corresponding amendments to its opening, automatic execution and complex order processing rules. The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, 13 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)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 VerDate Sep<11>2014 18:05 Feb 26, 2015 Jkt 235001 and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to adopt new Rule 6.12 to further describe its existing OHS and OMT operations, and to make corresponding amendments to its opening, automatic execution and complex order processing rules (Rules 6.2B, 6.13, and 6.53C, respectively). The Exchange notes that these OHS and OMT operations are currently in use and referenced in the Exchange Rules. The purpose of this rule change is simply to codify further details of the existing operations within the Exchange Rules. Background The CBOE Hybrid System 5 is a trading platform that allows automatic executions to occur electronically and open outcry trades to occur on the floor of the Exchange. To operate in this ‘‘hybrid’’ environment, the Exchange has made available to Trading Permit Holders (‘‘TPHs’’) a dynamic order handling system, also referred herein as OHS, that has the capability to route orders to the Hybrid System for automatic execution and book entry, to PAR workstations located in the trading 5 The CBOE ‘‘Hybrid System’’ or ‘‘Hybrid Trading System’’ refers to the Exchange’s trading platform that allows Market-Makers to submit electronic quotes in their appointed classes. The ‘‘Hybrid 3.0 Platform’’ is an electronic trading platform on the Hybrid Trading System that allows one or more quoters to submit electronic quotes which represent the aggregate Market-Maker quoting interest in a series for the trading crowd. Classes authorized by the Exchange for trading on the Hybrid Trading System shall be referred to as Hybrid classes. Classes authorized by the Exchange for trading on the Hybrid 3.0 Platform shall be referred to as Hybrid 3.0 classes. References to ‘‘Hybrid,’’ ‘‘Hybrid System,’’ or ‘‘Hybrid Trading System’’ in the Exchange’s Rules shall include all platforms unless otherwise provided by rule. See, e.g., Rule 1.1(aaa). PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 crowds for open outcry and other manual handling by TPHs and Exchange PAR Officials, and/or to other order management terminals generally located in booths on the trading floor for manual handling. Where an order is routed for processing by the Exchange order handling system depends on various parameters configured by the Exchange and the order entry firm itself. Thus, the OHS provides TPHs with some flexibility to determine how to process their orders in the CBOE Hybrid System. The Exchange believes these routing parameters assist with the maintenance of a fair and orderly market and help to mitigate potential risks associated with orders executing at potentially erroneous prices or inconsistent with a particular investment strategy by routing certain orders to a PAR workstation or a booth order management terminal for manual handling based on parameters determined by the Exchange under Rule 6.2B, 6.13 or 6.53C, by routing certain orders to an order management terminal based on parameters prescribed by the Exchange, by routing certain orders to an order management terminal or a PAR workstation or for electronic process, based on parameters prescribed by the order entry firm itself, and by routing certain orders to an order management terminal in the event of certain Exchange system disruptions or malfunctions. The order handling system also permits orders to be routed from a PAR workstation to an order management terminal (and vice versa) and from a PAR workstation or an order management terminal to the Hybrid System for automatic execution or book entry. The Exchange also views the order handling system as an important tool to assist order entry firms in their ability to efficiently manage, process and execute orders in a ‘‘hybrid’’ trading environment. The Exchange believes this, again, promotes fair and orderly markets, as well as assists the Exchange in its ability to effectively attract order flow and liquidity to its market, and ultimately benefits all CBOE TPHs and all investors. Regarding booth routing parameters in particular, an order may route to an order management terminal generally located in a booth depending on various circumstances. One such set of circumstances pertains to automatic execution/book ‘‘kick-outs.’’ In that regard, the electronic processes under Rules 6.2B (pertaining to opening transactions), 6.13 (pertaining to simple orders) and 6.53C (pertaining to complex orders), provide that an order that is not eligible for automatic E:\FR\FM\27FEN1.SGM 27FEN1

Agencies

[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Notices]
[Pages 10735-10738]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-04068]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74352; File No. SR-BATS-2015-13]


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

February 23, 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 10, 2015, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

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

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

    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify its fee schedule in order to: (1) 
remove the reference to ROLF from fee code BO; (2) make certain changes 
to Cross-Asset Step-Up Tier 3; and (3) make certain non-substantive 
clean-up changes to the fee schedule.
Deleting Reference to ROLF
    The Exchange proposes to amend its fee schedule to remove the 
reference to

[[Page 10736]]

ROLF from fee code BO. Fee code BO currently provides that the Exchange 
will charge $0.0030 per share for any order routed using ROLF or 
Destination Specific routing strategy unless otherwise specified. Under 
the ROLF routing strategy, an order will check the Exchange for 
available shares and then will be sent to LavaFlow ECN (``LavaFlow''). 
This change is being proposed in response to LavaFlow's announcement 
that it will cease market operations and its last day of trading will 
be Friday, January 30, 2015. As such, beginning on February 2, 2015, 
the Exchange will no longer route orders to LavaFlow. As proposed, the 
Exchange would continue to charge $0.0030 per share for orders routed 
using a Destination Specific routing strategy.
Step-Up Add TCV Definition
    The Exchange is also proposing to make a non-substantive change to 
the definition of ``Step-Up Add TCV'' in its fee schedule. Currently, 
Step-Up Add TCV means ADAV \6\ as a percentage of TCV \7\ in January 
2014 subtracted from current ADAV as a percentage of TCV. In order to 
add an additional month to use as a baseline for calculating Step-Up 
Add TCV, as further described below, the Exchange is proposing to amend 
the fee schedule such that Step-Up Add TCV means ADAV as a percentage 
of TCV in the relevant baseline month subtracted from current ADAV as a 
percentage of TCV. The Exchange is also proposing to make a 
corresponding non-substantive change to footnote 2, titled ``Step-Up 
Tiers,'' such that the criteria to qualify for the tiers is described 
as the ``Member's Step-Up TCV from January 2014 is equal to or greater 
than'' instead of ``Member's Step-Up TCV is equal to or greater than.'' 
This change is non-substantive because the Exchange is not proposing to 
amend any fees, rebates, or the calculation thereof, but rather making 
the requisite change in order for the rebate and the criteria 
associated with meeting the tiers to remain the same in conjunction 
with the proposed changes to the definition of Step-Up Add TCV outlined 
above.
---------------------------------------------------------------------------

    \6\ ``ADAV'' means average daily volume calculated as the number 
of shares added per day on a monthly basis.
    \7\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
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Cross-Asset Step-Up Tiers
    The Exchange is also proposing to amend the criteria for meeting 
Tier 3 in the Cross-Asset Step-Up Tiers. Specifically, the Exchange is 
proposing to make two changes: to base the tier calculation on a 
Member's Step-Up Add TCV from December 2014; and to lower the threshold 
required to meet Tier 3 from 0.20% to 0.15%. Currently, in order to 
meet Tier 3 of the Cross-Asset Step-Up Tier and receive a $0.0032 
rebate per share that adds liquidity: (i) a Member's ADAV as a 
percentage of TCV must be equal to or greater than 0.20%; and (ii) the 
Member's Options Step-Up Add TCV \8\ must be equal to or greater than 
0.60%. The Exchange is not proposing to amend requirement (ii). The 
Exchange is proposing to amend requirement (i) such that a Member must 
have a Step-Up Add TCV from December 2014 of at least 0.15% instead of 
an ADAV as a percentage of TCV of at least 0.20%, which will encourage 
increased participation on the Exchange by requiring that a Member 
increases its participation on the Exchange as compared to December 
2014, rather than maintaining a static ADAV as a percentage of TCV.
---------------------------------------------------------------------------

    \8\ ``Options Step-Up Add TCV'' means ADAV as a percentage of 
TCV in January 2014 subtracted from current ADAV as a percentage of 
TCV, using the definitions of ADAV and TCV as provided under the 
Exchange's fee schedule for BATS Options.
---------------------------------------------------------------------------

    The Exchange proposes to implement the amendments to its fee 
schedule effective February 10, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\9\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Sections 6(b)(4) of the Act and 6(b)(5) of the Act,\10\ 
in that it provides for the equitable allocation of reasonable dues, 
fees and other charges among members and other persons using any 
facility or system which the Exchange operates or controls. The 
Exchange notes that it operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to eliminate ROLF from fee 
code BO represents an equitable allocation of reasonable dues, fees, 
and other charges among Members and other persons using its facilities. 
The proposed change is in response to LavaFlow's announcement that it 
will cease market operations and its last day of trading will be 
Friday, January 30, 2015. The Exchange notes that the proposed change 
is not designed to amend any fee or rebate, nor alter the manner in 
which the Exchange assesses fees and rebates. As of February 2, 2015, 
the Exchange will no longer route orders to LavaFlow and, therefore, 
proposes to remove ROLF from the fee schedule, which will make the fee 
schedule clearer and less confusing for investors as well as help to 
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.
    The Exchange also believes that the proposed non-substantive change 
to the definition of Step-Up Add TCV and the corresponding non-
substantive change to the Step-Up Tiers are reasonable, fair, and 
equitable because they are designed to make the fee schedule easier to 
comprehend in light of the decision to add an additional baseline 
month, as described above. The Exchange notes that neither of the 
proposed changes are designed to amend any fee or rebate, nor alter the 
manner in which the Exchange assesses fees and rebates. These non-
substantive changes to the fee schedule 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.
    The Exchange also believes that the proposed change to measure the 
Member's Step-Up Add TCV from December 2014 instead of ADAV as a 
percentage of TCV is reasonable, fair, and equitable because it will 
incentive Members to increase their participation on the Exchange as 
compared to December 2014, rather than maintaining a static ADAV as a 
percentage of TCV. The Exchange further believes that the proposal is 
reasonable, fair, and equitable because the increased liquidity from 
incentivizing Members to increase their participation on the Exchange 
will benefit all investors by deepening the liquidity pool on the 
Exchange, supporting the quality of price discovery, promoting market 
transparency, and improving investor protection. The Exchange also 
believes that lowering the threshold to meet the requirement from 0.20% 
to 0.15% is reasonable, fair, and equitable because the measurement is 
changing from a measure of total added volume (ADAV

[[Page 10737]]

as a percentage of TCV) into a measure of the increase of added volume 
as compared to December 2014 (Step-Up Add TCV from December 2014) and 
the reduction will make it easier for Members to achieve Cross-Asset 
Step-Up Tier 3. The Exchange believes that step-up pricing programs 
such as that proposed herein reward a Member's growth pattern and that 
such increased volume increases the potential revenue to the Exchange, 
which will allow the Exchange to continue to provide and potentially 
expand the incentive programs operated by the Exchange. Such pricing 
programs are also fair and equitable in that they are available to all 
Members. Further, volume-based rebates and fees such as the ones 
maintained by the Exchange, including those amendments proposed herein, 
have been widely adopted by equities and options exchanges and are 
equitable because they are open to all Members on an equal basis and 
provide additional benefits or discounts that are reasonably related to 
the value to an exchange's market quality associated with higher levels 
of market activity, such as higher levels of liquidity provision and/or 
growth patterns, and introduction of higher volumes of orders into the 
price and volume discovery processes. Further, the Exchange believes 
that the Cross-Asset Step-Up Tiers will provide such enhancements in 
market quality on the Exchange by incentivizing increased participation 
by Members attempting to meet Tier 3. Accordingly, the Exchange 
believes that the proposed amendments to the Cross-Asset Step-Up Tiers 
and the incentives associated therewith are not unfairly discriminatory 
because they will apply uniformly to all Members and are consistent 
with the overall goals of enhancing market quality on the Exchange.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. To 
the contrary, the Exchange believes that the proposed changes to the 
Cross-Asset Step-Up Tiers will allow the Exchange to compete more ably 
with other execution venues by drawing additional volume to the 
Exchange, thereby making it a more desirable destination venue for its 
customers. Further, the Exchange does not believe that these proposed 
changes represent a significant departure from previous pricing offered 
by the Exchange or pricing offered by the Exchange's competitors. 
Additionally, Members may opt to disfavor the Exchange's pricing if 
they believe that alternatives offer them better value. Accordingly, 
the Exchange does not believe that the proposed change will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets.
    The Exchange also believes that its proposal to remove ROLF from 
fee code BO would not affect intermarket nor intramarket competition 
because the change is not designed to amend any fee or rebate or to 
alter the manner in which the Exchange assesses fees or calculates 
rebates. It is simply proposed in response to LavaFlow's announcement 
that it will cease market operations following the close of business on 
Friday, January 30, 2015.
    The Exchange believes that the non-substantive and organizational 
changes to the fee schedule would not affect intermarket nor 
intramarket competition because none of the proposed changes are 
designed to amend any fee or rebate or to alter the manner in which the 
Exchange asses fees or rebates. The changes are intended to make the 
fee schedule as clear and concise as possible.
    As stated above, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee structures to be 
unreasonable or excessive.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\12\ 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. If 
the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the 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-BATS-2015-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2015-13. 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BATS-2015-13 and should be 
submitted on or before March 20, 2015.


[[Page 10738]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-04068 Filed 2-26-15; 8:45 am]
BILLING CODE 8011-01-P
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