Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees for the BATS One Market Data Product, 17791-17795 [2015-07519]

Download as PDF Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / Notices (previously known as Let’s Move Museums, Let’s Move Gardens), IMLS will collect information about participant museums’ exhibits, programs, and food service operations that are targeted at fighting childhood obesity. The information will be used to confirm program participation requirements and to share best practices in public health programs. Current Actions: This notice proposes clearance of the Let’s Move! Museums & Gardens registration form. The 60-day notice for the Let’s Move! Museums & Gardens information collection was published in the Federal Register on December 5, 2014, (FR vol. 79, No. 234, pgs. 72214–72215). No comments were received. Agency: Institute of Museum and Library Services. Title: Let’s Move! Museums & Gardens. OMB Number: 3137–0084. Frequency: Annual. Affected Public: Museums, state, local, tribal government and not-forprofit institutions. Number of Respondents: 50. Estimated Time per Respondent: 0.17 hours. Total Annual Costs to Respondents: $164. Total Annualized to Federal Government: $4,615. Contact: Comments should be sent to Office of Information and Regulatory Affairs, Attn.: OMB Desk Officer for Education, Office of Management and Budget, Room 10235, Washington, DC 20503, (202) 395–7316. 2015, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) 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. Dated: March 30, 2015. Kim A. Miller, Management Analyst, Office of Planning, Research, and Evaluation. 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. [FR Doc. 2015–07611 Filed 4–1–15; 8:45 am] BILLING CODE CODE 7036–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74598; File No. SR–BATS– 2015–24] tkelley on DSK3SPTVN1PROD with NOTICES Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees for the BATS One Market Data Product March 27, 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 March 17, 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 18:52 Apr 01, 2015 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the market data section of its fee schedule to: (i) Establish a Digital Media Enterprise Fee for the BATS One Feed; and (ii) make a non-substantive change to the description of the BATS One Feed Enterprise fee. 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 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 the market data section of its fee schedule to: (i) Establish a Digital Media Enterprise Fee for the BATS One Feed; and (ii) make a non-substantive change 3 15 47 Jkt 235001 PO 00000 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). Frm 00078 Fmt 4703 Sfmt 4703 17791 to the description of the BATS One Feed Enterprise fee.5 The Commission recently approved a proposed rule change by the Exchange to establish a new market data product called the BATS One Feed 6 as well as published proposed rule changes to establish related fees.7 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 BZX and its affiliated exchanges 8 and for which the BATS Exchanges report quotes under the Consolidated Tape Association (‘‘CTA’’) Plan or the Nasdaq/UTP Plan.9 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 enables recipients to receive aggregated twosided quotations from the BATS Exchanges for up to five (5) price levels (‘‘BATS One Premium Feed’’). BATS One Digital Media Enterprise Fee The Exchange proposes to amend its fee schedule to establish a Digital Media Enterprise Fee of $15,000 per month for 5 The Exchange notes that the date of the fee schedule was amended to March 17, 2015 in a previously filed proposed rule change. See SR– BATS–2015–23 (filed March 17, 2015). 6 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’’). 7 See Securities Exchange Act Release Nos. 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR–EDGX–2015–09); 74283 (February 18, 2015), 80 FR 9809 (February 24, 2015) (SR–EDGA–2015–09); 74284 (February 18, 2015), 80 FR 9792 (February 24, 2015) (SR–BYX–2015–09); and 74285 (February 18, 2015), 80 FR 9828 (February 24, 2015) (SR– BATS–2015–11) (‘‘BATS One Fee Proposals’’). 8 BZX’s affiliated exchanges are EDGA Exchange, Inc. (‘‘EDGA’’), EDGX Exchange, Inc. (‘‘EDGX’’), and BATS Y-Exchange, Inc. (‘‘BYX’’, together with EDGX, EDGA, and BZX, 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.’’ 9 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. E:\FR\FM\02APN1.SGM 02APN1 17792 Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / Notices the BATS One Summary Feed and $25,000 per month for the BATS One Premium Feed. As an alternative to User fees,10 a recipient firm may purchase a monthly Digital Media Enterprise license to receive the BATS One Feed from an External Distributor 11 to distribute to an unlimited number of Professional and Non-Professional Users 12 for viewing via television, Web sites, and mobile devices for informational and non-trading purposes only without having to account for the extent of access to the data or the report the number of Users to the Exchange. The Digital Media Enterprise Fee would be in addition to the Data Consolidation Fee.13 tkelley on DSK3SPTVN1PROD with NOTICES Non-Substantive Change to the Description of the BATS One Enterprise Fee The Exchange proposes a nonsubstantive change to the description of the BATS One Enterprise fee. The fee schedule currently states that, ‘‘[a]s an alternative to User fees, a recipient firm may purchase a monthly Enterprise Fee to receive the BATS One Feed from an External Distributor for an unlimited number of Professional and Non10 The Exchange assesses 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 are assessed a monthly fee of $0.25 per user for the BATS One Summary Feed or $0.50 per user for the BATS One Premium Feed. External Distributors must count every Professional User and Non-Professional User to which they provide BATS One Feed data. See BATS One Fee Proposals, supra note 7. 11 As defined in the Exchange’s fee schedule, an External Distributor of an Exchange Market Data product is 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. 12 As defined in the Exchange’s fee schedule, a User of an Exchange Market Data product is a natural person, a proprietorship, corporation, partnership, or entity, or device (computer or other automated service), that is entitled to receive Exchange data. A Non-Professional User of an Exchange Market Data product is 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, or 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 would require registration or qualification if such functions were performed for an organization not so exempt. A Professional User of an Exchange Market Data product is any User other than a Non-Professional User. 13 The Data Consolidation Fee is $1,000 per month and is designed to reflect the value of the aggregation and consolidation function the Exchange performs in creating the BATS One Feed. See BATS One Fee Proposals, supra note 7. VerDate Sep<11>2014 18:52 Apr 01, 2015 Jkt 235001 Professional Users.’’ The Exchange proposes to amend this sentence in two ways. The first amendment is to state that a recipient firm may purchase a monthly Enterprise license, rather than Enterprise fee, as the term ‘‘license’’ is a more accurate description. The second is to specify that the recipient firm purchasing a monthly enterprise license does so to distribute the BATS One Feed to an unlimited number of Professional and Non-Professional Users. 2. Statutory Basis BATS One Digital Media Enterprise Fee The Exchange believes that the proposed Digital Media Enterprise Fee for the BATS One Feed is consistent with Section 6(b) of the Act,14 in general, and Section 6(b)(4) of the Act,15 in particular, in that it provides for an equitable allocation of reasonable fees among recipients of the data and is 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 16 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 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,17 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 products 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 fee is equitable and not unfairly discriminatory because it will apply uniformly to market data vendors, television broadcasters, Web site and mobile service providers. The Exchange believes it is reasonable to establish a lower cost fee structure that is designed to facilitate broader media distribution 14 15 U.S.C. 78f. U.S.C. 78f(b)(4). 16 15 U.S.C. 78k–1. 17 See 17 CFR 242.603. of the BATS One Data Feed for informational purposes because it will benefit investors generally. In establishing the Digital Media Enterprise Fee, the Exchange recognizes that there is demand for a more seamless and easier-to-administer data distribution mode that takes into account the expanded variety of media and communication devices that investors utilize today. The Exchange believes the Digital Media Enterprise Fee will be easy to administer because data recipients that purchase it would not be required to differentiate between Professional and Non-Professional Users, account for the extent of access to the data, or report the number of Users. This is a significant reduction on a recipient firm’s administrative burdens and is a significant value to investors. For example, a television broadcaster could display the BATS One Feed data during market-related programming and on its Web site or allow viewers to view the data via their mobile devices, creating a more seamless distribution model that will allow investors more choice in how they receive and view market data, all without having to account for and/or measure who accesses the data and how often they do so. The proposed Digital Media Enterprise Fee is equitable and reasonable because it will also enable recipient firms to more widely distribute data from the BATS One Feed to investors for informational purposes at a lower cost than is available today. For example, a recipient firm may purchase an Enterprise license in the amount of $50,000 per month for the BATS One Summary Feed and $100,000 per month for the BATS One Premium Feed to receive the BATS One Feed from an External Distributor for an unlimited number of Professional and Non-Professional Users, which is greater than the Digital Media Enterprise fee proposed herein. The Exchange also believes the amount of the Digital Enterprise [sic] is reasonable as compared to the existing Enterprise fees discussed above because the distribution of BATS One Feed data is limited to television, Web sites, and mobile devices for informational purposes only, while distribution of the BATS One Feed data pursuant to an Enterprise license contains no such limitation. The Exchange also believes that the proposed Digital Media Enterprise fee is equitable and reasonable because it is less than similar fees charged by other exchanges.18 15 15 PO 00000 Frm 00079 Fmt 4703 18 The Nasdaq Stock Market offers proprietary data products for distribution over the internet and Sfmt 4703 E:\FR\FM\02APN1.SGM 02APN1 Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / Notices tkelley on DSK3SPTVN1PROD with NOTICES The Exchange has taken into consideration its affiliated relationship with BYX, EDGA, and EDGX in proposing the Digital Media Enterprise fee 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. As discussed in in the BATS One Fee Proposal,19 any entity 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, and offer a data feed with the same information included in the BATS One Feed to sell and distribute it to its clients with no greater cost than the Exchange. To enable such competition, the Exchange is offering the Digital Media Enterprise license for the BATS One Feed on terms that a subscriber of the underlying feeds could offer a competing product if it so chooses. 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 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 An External Distributor that seeks to create a competing product to the BATS One Summary Feed could instead subscribe television under alternative fee schedules that are subject to maximum fee of $50,000 per month. See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise fee of $40,000 per month for the NYSE Trade Digital Media product. See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR 20983 (April 8, 2013) (SR–NYSE–2013–23). 19 See BATS One Fee Proposals, supra note 7. 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. VerDate Sep<11>2014 18:52 Apr 01, 2015 Jkt 235001 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 these individual data feeds of the BATS Exchanges is $5,000 per month.24 The Exchange proposes to charge a Digital Media Enterprise Fee ($15,000 per month for the BATS One Summary Feed and $25,000 per month for the BATS One Premium Feed, plus the $1,000 per month Data Consolidation fee) that exceeds the combined External Distributor fees for each of the individual feeds listed above to ensure that vendors could compete with the Exchange by creating the same product as the BATS One Feed to sell to their clients at no greater cost than the Exchange. The decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010), upheld the Commission’s reliance upon the existence of competitive market mechanisms to set reasonable and equitably allocated fees for proprietary market data. In fact, the legislative history indicates that the Congress intended that the market system ‘evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed’ and that the SEC wield its regulatory power ‘in those situations where competition may not be sufficient,’ such as in the creation of a ‘consolidated transactional reporting system.’ Id. at 535 (quoting H.R. Rep. No. 94– 229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323). The court agreed with the Commission’s conclusion that ‘‘Congress intended that ‘competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.’ ’’ 25 As explained below in the Exchange’s Statement on Burden on Competition, the Exchange believes that there is substantial evidence of competition in the marketplace for data and that the Commission can rely upon such evidence in concluding that the fees established in this filing are the product 23 See supra note 6. 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 (as proposed herein), free for EDGA Top and EDGA Last Sale, $1,250 for BYX Top and BYX Last Sale, and $2,500 for BZX Top and BZX Last Sale. See BATS One Fee Proposals, supra note 7. 25 NetCoalition, 615 F.3d at 535. PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 17793 of competition and therefore satisfy the relevant statutory standards.26 In addition, the existence of alternatives to the BATS One Feed, including real-time consolidated data, free delayed consolidated data, and proprietary last sale data from other sources, as described below, further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and users can elect such alternatives. As the NetCoalition decision noted, the Commission is not required to undertake a cost-of-service or ratemaking approach, and the Exchange incorporates by reference into this proposed rule change its affiliate’s [sic] analysis of this topic in another rule filing.27 For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory. Non-Substantive Change to the Description of the BATS One Enterprise Fee The Exchange believes that the proposed change to the BATS One Enterprise Fee is consistent with Section 6(b) of the Act,28 in general, and Section 6(b)(4) of the Act,29 in particular, in that it provides for an equitable allocation of reasonable fees among recipients of the data and is not designed to permit unfair discrimination among customers, brokers, or dealers. The proposal to amend the description of the Enterprise fee within the fee schedule is equitable and reasonable because the changes are designed to clarify the fee schedule and avoid potential investor confusion. The proposed changes do not amend the amount or application of the BATS One Enterprise fee. The proposed changes are also non-discriminatory as they would apply to all recipient firms uniformly [sic]. 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. 26 Section 916 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the ‘‘Dodd-Frank Act’’) amended paragraph (A) of Section 19(b)(3) of the Act, 15 U.S.C. 78s(b)(3), to make clear that all exchange fees for market data may be filed by exchanges on an immediately effective basis. 27 See Securities Exchange Act Release No. 63291 (Nov. 9, 2010), 75 FR 70311 (November 17, 2010) (SR–NYSEArca–2010–97). 28 15 U.S.C. 78f. 29 15 U.S.C. 78f(b)(4). E:\FR\FM\02APN1.SGM 02APN1 17794 Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / Notices BATS One Digital Media Enterprise Fee The BATS One Feed Digital Media Enterprise fee will enhance competition because it 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.30 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.31 Nasdaq offers Nasdaq Basic, a filed market data product, and through its affiliate, offers NLS Plus which provides a unified view of last sale information similar to the BATS One Feed.32 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 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 tkelley on DSK3SPTVN1PROD with NOTICES 30 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) (data feed providing unified view of BBO and last sale information for the NYSE, NYSE Arca, and NYSE MKT). 31 Id. 32 Id. VerDate Sep<11>2014 18:52 Apr 01, 2015 Jkt 235001 cost to purchase is not justified by the returns any particular vendor or subscriber would achieve through the purchase. Finally, 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 is not the exclusive distributor of the aggregated and consolidated information that would compose the BATS One Feed. The Exchange has taken into consideration its affiliated relationship with BYX, EDGA, and EDGX 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. As discussed in in [sic] the BATS One Fee Proposal,33 any entity 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, and offer a data feed with the same information included in the BATS One Feed to sell and distribute it to its clients with no greater cost than the Exchange. To enable such competition, the amount of the proposed Digital Media Enterprise license 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 amount of the proposed Digital Media Enterprise license, coupled with the Data Consolidation Fee, is not lower than the cost to a vendor of receiving the underlying data feeds to create a competing product. Therefore, the amount of the proposed Digital Media Enterprise license 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. Non-Substantive Change to the Description of the BATS One Enterprise Fee The proposal to amend the description of the Enterprise fee within the fee schedule will not have any impact on completion [sic]. The proposed changes are designed to clarify the fee schedule and avoid potential investor confusion and do not amend the amount or application of the BATS One Enterprise fee. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 34 and paragraph (f) of Rule 19b–4 thereunder.35 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BATS–2015–24 on the subject line. Paper Comments • 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–BATS–2015–24. 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 34 15 33 See PO 00000 BATS One Fee Proposals, supra note 7. Frm 00081 Fmt 4703 Sfmt 4703 35 17 E:\FR\FM\02APN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 02APN1 Federal Register / Vol. 80, No. 63 / Thursday, April 2, 2015 / Notices 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 20549–1090, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BATS– 2015–24, and should be submitted on or before April 23, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.36 Brent J. Fields, Secretary. [FR Doc. 2015–07519 Filed 4–1–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74595; File No. SR– NYSEArca–2015–04] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Listing and Trading of Shares of the Innovator IBD® 50 Fund Under NYSE Arca Equities Rule 8.600 tkelley on DSK3SPTVN1PROD with NOTICES March 27, 2015. On January 30, 2015, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares (‘‘Shares’’) of the Innovator IBD® 50 Fund (‘‘Fund’’). On February 12, 2015, 36 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:52 Apr 01, 2015 Jkt 235001 the Exchange filed Amendment No. 1 to the proposed rule change, which amended and replaced the proposal in its entirety. The proposed rule change was published for comment in the Federal Register on February 20, 2015.3 No comments on the proposal have been received. This order approves the proposed rule change, as modified by Amendment No. 1. I. The Exchange’s Description of the Proposed Rule Change The Exchange proposes to list and trade the Shares under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by Academy Funds Trust (the ‘‘Trust’’), an open-end management investment company.4 The Fund will issue and sell Shares only in ‘‘Creation Unit’’ size at the NAV next determined after receipt, on any business day, of an order in proper form.5 The investment adviser to the Fund will be Innovator Management LLC (the ‘‘Adviser’’). Penserra Capital Management LLC will be the Fund’s sub-adviser (‘‘Sub-Adviser’’). Neither the Adviser nor the Sub-Adviser is registered as a broker-dealer. The Adviser is not affiliated with a brokerdealer. The Sub-Adviser is affiliated with a broker-dealer and has implemented a ‘‘fire wall’’ with respect to such broker-dealer regarding access to information concerning the composition of or changes to the Fund’s portfolio.6 3 See Securities Exchange Act Release No. 74278 (February 13, 2015), 80 FR 9294. 4 The Trust is registered under the 1940 Act. On October 9, 2014 and on December 19, 2014, the Trust filed with the Commission amendments to its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’) and under the 1940 Act relating to the Fund (File Nos. 333–146827 and 811–22135) (‘‘Registration Statement’’). In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 31248 (September 9, 2014) (File No. 812–14308) (‘‘Exemptive Order’’). 5 A Creation Unit consists of 25,000 Shares, and the size of a Creation Unit is subject to change. See Notice, supra note 3, 80 FR at 9296. 6 Commentary .06 to Rule 8.600 provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a ‘‘fire wall’’ between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio. In addition, Commentary .06 requires that personnel who make decisions on the open-end fund’s portfolio composition must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the openend fund’s portfolio. Commentary .06 to Rule 8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the establishment of a ‘‘fire PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 17795 U.S. Bank, N.A.(the ‘‘Administrator’’ or ‘‘Custodian’’) will serve as the administrator, custodian and transfer agent for the Fund. Quasar Distributors, LLC will be the principal underwriter and distributor of the Shares. The investment objective of the Fund will be to seek long-term capital appreciation. Under normal circumstances,7 the Fund will invest at least 80% of its net assets in companies included in the IBD® 50 Index (‘‘Index’’) and in U.S. exchange-traded equities.8 Typically, the Fund will hold U.S. exchange-traded common stocks as well as U.S. exchange-traded master limited partnerships (‘‘MLPs’’), real estate investment trusts (‘‘REITs’’), royalty trusts and business development companies (‘‘BDCs’’). It will invest primarily in U.S. equity securities but may, to a lesser extent, invest in equity securities of foreign companies in both developed and emerging markets, generally through American depositary receipts (‘‘ADRs’’). The Fund may invest in companies of any size. Other Portfolio Holdings. The Fund may invest in money market securities for liquidity and cash management purposes or if the Adviser or SubAdviser determines that securities meeting the Fund’s investment objective and policies are not otherwise readily available for purchase. Money market securities include (i) short-term U.S. government securities; (ii) commercial paper rated in the highest short-term rating category by a nationally recognized statistical ratings wall’’ between the investment adviser and the broker-dealer reflects the applicable open-end fund’s portfolio, not an underlying benchmark index, as is the case with index-based funds. The Exchange states that, in the event (a) the Adviser or the Sub-Adviser becomes a registered brokerdealer or becomes newly affiliated with a brokerdealer, or (b) any new adviser or any sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel or its brokerdealer affiliate regarding access to information concerning the composition and/or changes to the Fund’s portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. 7 The term ‘‘under normal circumstances’’ means, without limitation, the absence of extreme volatility or trading halts in the equity markets or the financial markets generally; operational issues causing dissemination of inaccurate market information; or force majeure type events such as systems failure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. 8 The Index is a computer-generated stock index published by Investor’s Business Daily® (‘‘IBD®’’). IBD® uses proprietary fundamental and technical ratings to compile what IBD® considers the 50 leading growth companies that trade on U.S. national securities exchanges. Companies included in the Index must meet minimum earnings, sales, profit margin, volume and technical requirements. E:\FR\FM\02APN1.SGM 02APN1

Agencies

[Federal Register Volume 80, Number 63 (Thursday, April 2, 2015)]
[Notices]
[Pages 17791-17795]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-07519]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74598; File No. SR-BATS-2015-24]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fees for the BATS One Market Data Product

March 27, 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 March 17, 2015, BATS Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 7 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 the market data section of 
its fee schedule to: (i) Establish a Digital Media Enterprise Fee for 
the BATS One Feed; and (ii) make a non-substantive change to the 
description of the BATS One Feed Enterprise fee.
    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 amend the market data section of its fee 
schedule to: (i) Establish a Digital Media Enterprise Fee for the BATS 
One Feed; and (ii) make a non-substantive change to the description of 
the BATS One Feed Enterprise fee.\5\
---------------------------------------------------------------------------

    \5\ The Exchange notes that the date of the fee schedule was 
amended to March 17, 2015 in a previously filed proposed rule 
change. See SR-BATS-2015-23 (filed March 17, 2015).
---------------------------------------------------------------------------

    The Commission recently approved a proposed rule change by the 
Exchange to establish a new market data product called the BATS One 
Feed \6\ as well as published proposed rule changes to establish 
related fees.\7\ 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 BZX and its affiliated 
exchanges \8\ and for which the BATS Exchanges report quotes under the 
Consolidated Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\9\ 
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 enables recipients to receive aggregated two-sided 
quotations from the BATS Exchanges for up to five (5) price levels 
(``BATS One Premium Feed'').
---------------------------------------------------------------------------

    \6\ 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'').
    \7\ See Securities Exchange Act Release Nos. 74282 (February 17, 
2015), 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09); 74283 
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74284 (February 18, 2015), 80 FR 9792 (February 24, 2015) (SR-
BYX-2015-09); and 74285 (February 18, 2015), 80 FR 9828 (February 
24, 2015) (SR-BATS-2015-11) (``BATS One Fee Proposals'').
    \8\ BZX's affiliated exchanges are EDGA Exchange, Inc. 
(``EDGA''), EDGX Exchange, Inc. (``EDGX''), and BATS Y-Exchange, 
Inc. (``BYX'', together with EDGX, EDGA, and BZX, 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.''
    \9\ 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.
---------------------------------------------------------------------------

BATS One Digital Media Enterprise Fee
    The Exchange proposes to amend its fee schedule to establish a 
Digital Media Enterprise Fee of $15,000 per month for

[[Page 17792]]

the BATS One Summary Feed and $25,000 per month for the BATS One 
Premium Feed. As an alternative to User fees,\10\ a recipient firm may 
purchase a monthly Digital Media Enterprise license to receive the BATS 
One Feed from an External Distributor \11\ to distribute to an 
unlimited number of Professional and Non-Professional Users \12\ for 
viewing via television, Web sites, and mobile devices for informational 
and non-trading purposes only without having to account for the extent 
of access to the data or the report the number of Users to the 
Exchange. The Digital Media Enterprise Fee would be in addition to the 
Data Consolidation Fee.\13\
---------------------------------------------------------------------------

    \10\ The Exchange assesses 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 are assessed a monthly fee of $0.25 per 
user for the BATS One Summary Feed or $0.50 per user for the BATS 
One Premium Feed. External Distributors must count every 
Professional User and Non-Professional User to which they provide 
BATS One Feed data. See BATS One Fee Proposals, supra note 7.
    \11\ As defined in the Exchange's fee schedule, an External 
Distributor of an Exchange Market Data product is 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.
    \12\ As defined in the Exchange's fee schedule, a User of an 
Exchange Market Data product is a natural person, a proprietorship, 
corporation, partnership, or entity, or device (computer or other 
automated service), that is entitled to receive Exchange data. A 
Non-Professional User of an Exchange Market Data product is 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, or 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 
would require registration or qualification if such functions were 
performed for an organization not so exempt. A Professional User of 
an Exchange Market Data product is any User other than a Non-
Professional User.
    \13\ The Data Consolidation Fee is $1,000 per month and is 
designed to reflect the value of the aggregation and consolidation 
function the Exchange performs in creating the BATS One Feed. See 
BATS One Fee Proposals, supra note 7.
---------------------------------------------------------------------------

Non-Substantive Change to the Description of the BATS One Enterprise 
Fee
    The Exchange proposes a non-substantive change to the description 
of the BATS One Enterprise fee. The fee schedule currently states that, 
``[a]s an alternative to User fees, a recipient firm may purchase a 
monthly Enterprise Fee to receive the BATS One Feed from an External 
Distributor for an unlimited number of Professional and Non-
Professional Users.'' The Exchange proposes to amend this sentence in 
two ways. The first amendment is to state that a recipient firm may 
purchase a monthly Enterprise license, rather than Enterprise fee, as 
the term ``license'' is a more accurate description. The second is to 
specify that the recipient firm purchasing a monthly enterprise license 
does so to distribute the BATS One Feed to an unlimited number of 
Professional and Non-Professional Users.
2. Statutory Basis
BATS One Digital Media Enterprise Fee
    The Exchange believes that the proposed Digital Media Enterprise 
Fee for the BATS One Feed is consistent with Section 6(b) of the 
Act,\14\ in general, and Section 6(b)(4) of the Act,\15\ in particular, 
in that it provides for an equitable allocation of reasonable fees 
among recipients of the data and is 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 \16\ 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 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,\17\ 
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 products 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78k-1.
    \17\ See 17 CFR 242.603.
---------------------------------------------------------------------------

    In addition, the proposed fee is equitable and not unfairly 
discriminatory because it will apply uniformly to market data vendors, 
television broadcasters, Web site and mobile service providers. The 
Exchange believes it is reasonable to establish a lower cost fee 
structure that is designed to facilitate broader media distribution of 
the BATS One Data Feed for informational purposes because it will 
benefit investors generally.
    In establishing the Digital Media Enterprise Fee, the Exchange 
recognizes that there is demand for a more seamless and easier-to-
administer data distribution mode that takes into account the expanded 
variety of media and communication devices that investors utilize 
today. The Exchange believes the Digital Media Enterprise Fee will be 
easy to administer because data recipients that purchase it would not 
be required to differentiate between Professional and Non-Professional 
Users, account for the extent of access to the data, or report the 
number of Users. This is a significant reduction on a recipient firm's 
administrative burdens and is a significant value to investors. For 
example, a television broadcaster could display the BATS One Feed data 
during market-related programming and on its Web site or allow viewers 
to view the data via their mobile devices, creating a more seamless 
distribution model that will allow investors more choice in how they 
receive and view market data, all without having to account for and/or 
measure who accesses the data and how often they do so.
    The proposed Digital Media Enterprise Fee is equitable and 
reasonable because it will also enable recipient firms to more widely 
distribute data from the BATS One Feed to investors for informational 
purposes at a lower cost than is available today. For example, a 
recipient firm may purchase an Enterprise license in the amount of 
$50,000 per month for the BATS One Summary Feed and $100,000 per month 
for the BATS One Premium Feed to receive the BATS One Feed from an 
External Distributor for an unlimited number of Professional and Non-
Professional Users, which is greater than the Digital Media Enterprise 
fee proposed herein. The Exchange also believes the amount of the 
Digital Enterprise [sic] is reasonable as compared to the existing 
Enterprise fees discussed above because the distribution of BATS One 
Feed data is limited to television, Web sites, and mobile devices for 
informational purposes only, while distribution of the BATS One Feed 
data pursuant to an Enterprise license contains no such limitation. The 
Exchange also believes that the proposed Digital Media Enterprise fee 
is equitable and reasonable because it is less than similar fees 
charged by other exchanges.\18\
---------------------------------------------------------------------------

    \18\ The Nasdaq Stock Market offers proprietary data products 
for distribution over the internet and television under alternative 
fee schedules that are subject to maximum fee of $50,000 per month. 
See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise 
fee of $40,000 per month for the NYSE Trade Digital Media product. 
See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR 
20983 (April 8, 2013) (SR-NYSE-2013-23).

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

[[Page 17793]]

    The Exchange has taken into consideration its affiliated 
relationship with BYX, EDGA, and EDGX in proposing the Digital Media 
Enterprise fee 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. As discussed in in the BATS One Fee Proposal,\19\ any entity 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, and offer a data 
feed with the same information included in the BATS One Feed to sell 
and distribute it to its clients with no greater cost than the 
Exchange.
---------------------------------------------------------------------------

    \19\ See BATS One Fee Proposals, supra note 7.
---------------------------------------------------------------------------

    To enable such competition, the Exchange is offering the Digital 
Media Enterprise license for the BATS One Feed on terms that a 
subscriber of the underlying feeds could offer a competing product if 
it so chooses. 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 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\ 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 these individual data feeds of the BATS 
Exchanges is $5,000 per month.\24\ The Exchange proposes to charge a 
Digital Media Enterprise Fee ($15,000 per month for the BATS One 
Summary Feed and $25,000 per month for the BATS One Premium Feed, plus 
the $1,000 per month Data Consolidation fee) that exceeds the combined 
External Distributor fees for each of the individual feeds listed above 
to ensure that vendors could compete with the Exchange by creating the 
same product as the BATS One Feed to sell to their clients at no 
greater cost than the Exchange.
---------------------------------------------------------------------------

    \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 6. 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 (as proposed herein), free for EDGA 
Top and EDGA Last Sale, $1,250 for BYX Top and BYX Last Sale, and 
$2,500 for BZX Top and BZX Last Sale. See BATS One Fee Proposals, 
supra note 7.
---------------------------------------------------------------------------

    The decision of the United States Court of Appeals for the District 
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 
2010), upheld the Commission's reliance upon the existence of 
competitive market mechanisms to set reasonable and equitably allocated 
fees for proprietary market data.
    In fact, the legislative history indicates that the Congress 
intended that the market system `evolve through the interplay of 
competitive forces as unnecessary regulatory restrictions are removed' 
and that the SEC wield its regulatory power `in those situations where 
competition may not be sufficient,' such as in the creation of a 
`consolidated transactional reporting system.'
    Id. at 535 (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted 
in 1975 U.S.C.C.A.N. 323). The court agreed with the Commission's 
conclusion that ``Congress intended that `competitive forces should 
dictate the services and practices that constitute the U.S. national 
market system for trading equity securities.' '' \25\
---------------------------------------------------------------------------

    \25\ NetCoalition, 615 F.3d at 535.
---------------------------------------------------------------------------

    As explained below in the Exchange's Statement on Burden on 
Competition, the Exchange believes that there is substantial evidence 
of competition in the marketplace for data and that the Commission can 
rely upon such evidence in concluding that the fees established in this 
filing are the product of competition and therefore satisfy the 
relevant statutory standards.\26\ In addition, the existence of 
alternatives to the BATS One Feed, including real-time consolidated 
data, free delayed consolidated data, and proprietary last sale data 
from other sources, as described below, further ensures that the 
Exchange cannot set unreasonable fees, or fees that are unreasonably 
discriminatory, when vendors and users can elect such alternatives.
---------------------------------------------------------------------------

    \26\ Section 916 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (the ``Dodd-Frank Act'') amended 
paragraph (A) of Section 19(b)(3) of the Act, 15 U.S.C. 78s(b)(3), 
to make clear that all exchange fees for market data may be filed by 
exchanges on an immediately effective basis.
---------------------------------------------------------------------------

    As the NetCoalition decision noted, the Commission is not required 
to undertake a cost-of-service or ratemaking approach, and the Exchange 
incorporates by reference into this proposed rule change its 
affiliate's [sic] analysis of this topic in another rule filing.\27\
---------------------------------------------------------------------------

    \27\ See Securities Exchange Act Release No. 63291 (Nov. 9, 
2010), 75 FR 70311 (November 17, 2010) (SR-NYSEArca-2010-97).
---------------------------------------------------------------------------

    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.
Non-Substantive Change to the Description of the BATS One Enterprise 
Fee
    The Exchange believes that the proposed change to the BATS One 
Enterprise Fee is consistent with Section 6(b) of the Act,\28\ in 
general, and Section 6(b)(4) of the Act,\29\ in particular, in that it 
provides for an equitable allocation of reasonable fees among 
recipients of the data and is not designed to permit unfair 
discrimination among customers, brokers, or dealers. The proposal to 
amend the description of the Enterprise fee within the fee schedule is 
equitable and reasonable because the changes are designed to clarify 
the fee schedule and avoid potential investor confusion. The proposed 
changes do not amend the amount or application of the BATS One 
Enterprise fee. The proposed changes are also non-discriminatory as 
they would apply to all recipient firms uniformly [sic].
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f.
    \29\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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.

[[Page 17794]]

BATS One Digital Media Enterprise Fee
    The BATS One Feed Digital Media Enterprise fee will enhance 
competition because it 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.\30\ 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.\31\ Nasdaq offers Nasdaq Basic, a filed market data 
product, and through its affiliate, offers NLS Plus which provides a 
unified view of last sale information similar to the BATS One Feed.\32\ 
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.
---------------------------------------------------------------------------

    \30\ 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).
    \31\ Id.
    \32\ 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 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.
    Finally, 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 is not the exclusive 
distributor of the aggregated and consolidated information that would 
compose the BATS One Feed. The Exchange has taken into consideration 
its affiliated relationship with BYX, EDGA, and EDGX 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. As discussed in in [sic] the BATS One Fee Proposal,\33\ any 
entity 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, and 
offer a data feed with the same information included in the BATS One 
Feed to sell and distribute it to its clients with no greater cost than 
the Exchange.
---------------------------------------------------------------------------

    \33\ See BATS One Fee Proposals, supra note 7.
---------------------------------------------------------------------------

    To enable such competition, the amount of the proposed Digital 
Media Enterprise license 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 amount of the 
proposed Digital Media Enterprise license, coupled with the Data 
Consolidation Fee, is not lower than the cost to a vendor of receiving 
the underlying data feeds to create a competing product. Therefore, the 
amount of the proposed Digital Media Enterprise license 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.
Non-Substantive Change to the Description of the BATS One Enterprise 
Fee
    The proposal to amend the description of the Enterprise fee within 
the fee schedule will not have any impact on completion [sic]. The 
proposed changes are designed to clarify the fee schedule and avoid 
potential investor confusion and do not amend the amount or application 
of the BATS One Enterprise fee.

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

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

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \34\ and paragraph (f) of Rule 19b-4 
thereunder.\35\ 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.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BATS-2015-24 on the subject line.

Paper Comments

     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-BATS-2015-24. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will

[[Page 17795]]

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 20549-1090, on 
official business days between the hours of 10:00 a.m. and 3:00 p.m. 
Copies of such filing also will be available for inspection and copying 
at the principal office of the Exchange. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BATS-2015-24, and should be submitted on 
or before April 23, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-07519 Filed 4-1-15; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.