Self-Regulatory Organizations; Bats BZX Exchange, Inc. f/k/a BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc., 13861-13864 [2016-05751]
Download as PDF
Federal Register / Vol. 81, No. 50 / Tuesday, March 15, 2016 / Notices
burden on competition is necessary and
appropriate in furtherance of the
purposes of Section 6(b)(5) of the Act
because it enhances and promotes the
frequency of SNAP Cycles, which is a
functionality that seeks to deemphasize
speed as a key to trading success in
order to further serve the interests of
investors, as recently noted by Chair
White, and thereby removes
impediments and perfects the
mechanisms of a free and open
market.32
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be 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:
asabaliauskas on DSK3SPTVN1PROD with NOTICES
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–
CHX–2016–01 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–CHX–2016–01. This file
number should be included on the
32 See Mary Jo White, Chair, Securities and
Exchange Commission, Speech at Sandler O’Neil &
Partners L.P. Global Exchange and Brokerage
Conference (June 5, 2014).
VerDate Sep<11>2014
17:40 Mar 14, 2016
Jkt 238001
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange and on its
Internet Web site at www.chx.com. 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–CHX–2016–01, and should
be submitted on or before April 5, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–05752 Filed 3–14–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77330; File No. SR–BATS–
2016–26]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc. f/k/a BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Fees for Use
of BATS Exchange, Inc.
March 9, 2016.
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 1,
2016, Bats BZX Exchange, Inc. f/k/a
BATS Exchange, Inc. (the ‘‘Exchange’’
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
13861
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend the fee schedule applicable to
Members 5 and non-members of the
Exchange pursuant to BZX Rules 15.1(a)
and (c).
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 applicable to the
Exchange’s options platform to: (i)
Modify the standard fees for both
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
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Customer 6 and Non-Customer 7 orders
that remove liquidity in Non-Penny
Pilot Securities; 8 (ii) modify the
standard fees for Customer orders that
remove liquidity in Penny Pilot
Securities; 9 (iii) amend the criteria
necessary to meet and the rebate
associated with the Customer Add
Volume Tier 4; (iv) amend the criteria
necessary to meet the Customer Step-Up
Volume Tier; (v) add a new footnote 12
entitled Customer Non-Penny Pilot Add
Volume Tier; and (vi) add a new NonCustomer Take Volume Tier under
footnote 3.
Removing Liquidity in Non-Penny Pilot
Securities
The Exchange is proposing to modify
the standard fees for both Customer and
Non-Customer orders that remove
liquidity in Non-Penny Pilot Securities
under fee codes NC and NP,
respectively. Specifically, the Exchange
is proposing to increase the standard fee
for Customer orders that remove
liquidity in Non-Penny Pilot Securities
under fee code NC from $0.84 to $0.85
per contract and the standard fee for
Non-Customer orders that remove
liquidity in Non-Penny Pilot Securities
under fee code NP from $0.89 to $0.94
per contract.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Customer Orders That Remove Liquidity
in Penny Pilot Securities
The Exchange is proposing to modify
the standard fees for Customer orders
that remove liquidity in Penny Pilot
Securities under fee code PC.
Specifically, the Exchange is proposing
to increase the standard fee for
Customer orders that remove liquidity
in Penny Pilot Securities under fee code
PC from $0.46 to $0.48 per contract.
Customer Add Volume Tier 4
The Exchange is proposing to amend
the criteria necessary to meet and the
rebate associated with the Customer
Add Volume Tier 4 under footnote 1,
which currently provides Members with
a rebate of $0.50 per contract for
Customer orders that add liquidity in
Penny Pilot Securities where the
Member has an ADAV 10 equal to or
greater than 0.85% of average TCV.11
Specifically, the Exchange is proposing
to amend Customer Add Volume Tier 4
such that a Member will receive a $0.52
rebate for Customer orders that add
6 As defined in the Exchange’s fee schedule
available at https://www.batsoptions.com/support/
fee_schedule/bzx/.
7 Id.
8 Id.
9 Id.
10 Id.
11 Id.
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17:40 Mar 14, 2016
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liquidity in Penny Pilot Securities
where the Member has an ADAV in
Customer orders equal to or greater than
1.00% of average TCV.
Customer Step-Up Volume Tier
The Exchange is proposing to amend
the criteria necessary to meet the
Customer Step-Up Volume Tier, which
currently provides Members with a
rebate of $0.53 per contract where the
Member has an Options Step-Up Add
TCV 12 in Customer orders from
September 2015 baseline equal to or
greater than 0.35%. Specifically, the
Exchange is proposing to continue
offering a rebate of $0.53 per contract
where the Member has an Options StepUp Add TCV in Customer orders from
September 2015 baseline equal to or
greater than 0.40%.
Customer Non-Penny Pilot Add Volume
Tier
The Exchange is proposing to create a
new footnote 12 entitled ‘‘Customer
Non-Penny Pilot Add Volume Tier,’’
which would apply to orders that
receive fee code NY. Under the
proposed new tier, Customer orders that
add liquidity in Non-Penny Pilot
Securities would receive $1.00 per
contract where the Member has an
ADAV in Customer orders equal to or
greater than 0.70% of average TCV.
New Non-Customer Take Volume Tier
The Exchange is proposing to add a
new Non-Customer Take Volume Tier
under footnote 3. Under the new NonCustomer Take Volume Tier 3, the
Exchange would charge $0.47 per
contract for a Non-Customer order to
remove liquidity in Penny Pilot
Securities where the Member has an
ADAV in Customer orders equal to or
greater than 1.00% of average TCV. In
conjunction with this proposed change,
the Exchange is proposing to change
current Non-Customer Take Volume
Tier 3 to Non-Customer Take Volume
Tier 4.
Implementation Date
The Exchange proposes to implement
these amendments to its fee schedule on
March 1, 2016.
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.13
Specifically, the Exchange believes that
the proposed rule change is consistent
with Section 6(b)(4) of the Act,14 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 to be
excessive.
Volume-based rebates such as those
currently maintained on the Exchange
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.
Removing Liquidity in Non-Penny Pilot
Securities
The Exchange believes that its
proposal to change the standard fee
charged for Customer orders that
remove liquidity in Non-Penny Pilot
Securities from $0.84 to $0.85 per
contract and the standard fee for NonCustomer orders that remove liquidity
in Non-Penny Pilot Securities under fee
code NP from $0.89 to $0.94 per
contract is reasonable, fair and equitable
and non-discriminatory, for the reasons
set forth above with respect to volumebased pricing generally, because the
change will apply equally to all
participants, and because, while the
change marks an increase in fees for
orders in Non-Penny Pilot Securities,
such proposed fees remain consistent
with pricing previously offered by the
Exchange as well as competitors of the
Exchange and does not represent a
significant departure from the
Exchange’s general pricing structure and
will allow the Exchange to earn
additional revenue that can be used to
offset the addition of new pricing
incentives, including those introduced
as part of this proposal.
Customer Orders That Remove Liquidity
in Penny Pilot Securities
The Exchange believes that its
proposal to increase the standard fees
for Customer orders that remove
liquidity in Penny Pilot Securities from
$0.46 to $0.48 per contract is
12 Id.
13 15
PO 00000
U.S.C. 78f.
Frm 00092
Fmt 4703
14 15
Sfmt 4703
E:\FR\FM\15MRN1.SGM
U.S.C. 78f(b)(4).
15MRN1
Federal Register / Vol. 81, No. 50 / Tuesday, March 15, 2016 / Notices
reasonable, fair and equitable and nondiscriminatory, for the reasons set forth
above with respect to volume-based
pricing generally, because such change
will apply equally to all participants,
and because, while the change marks an
increase in fees for such orders, such
proposed fees remain consistent with
pricing previously offered by the
Exchange as well as competitors of the
Exchange and does not represent a
significant departure from the
Exchange’s general pricing structure and
will allow the Exchange to earn
additional revenue that can be used to
offset the addition of new pricing
incentives, including those introduced
as part of this proposal.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Customer Add Volume Tier 4
The Exchange believes that its
proposal to amend Customer Add
Volume Tier 4 such that a Member will
receive a $0.52 rebate for Customer
orders that add liquidity in Penny Pilot
Securities where the Member has an
ADAV in Customer orders equal to or
greater than 1.00% of average TCV is
reasonable, fair and equitable and nondiscriminatory, for the reasons set forth
above with respect to volume-based
pricing generally and because such
change will apply equally to all
participants and will incentivize such
participants to further contribute to
market quality on the Exchange.
Moreover, the proposed change will
provide Members with an increased
incentive (increasing the rebate from
$0.50 to $0.52 per contract) to add
liquidity in Customer orders, which the
Exchange not only believes will
enhance market quality for all market
participants, but will also encourage
increased participation of NonCustomer orders wanting to interact
with such Customer orders, further to
the benefit of all market participants.
The Exchange also believes that the
proposed rebate remains consistent with
pricing previously offered by the
Exchange as well as competitors of the
Exchange and does not represent a
significant departure from the
Exchange’s general pricing structure.
Customer Step-Up Volume Tier
The Exchange believes that its
proposal to increase the Options StepUp Add TCV in Customer orders from
September 2015 baseline to 0.40% in
order to receive a rebate of $0.53 is
reasonable, fair and equitable and nondiscriminatory, for the reasons set forth
above with respect to volume-based
pricing generally and because such
change will apply equal to all
participants and incentivize such
participants to further contribute to
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17:40 Mar 14, 2016
Jkt 238001
market quality on the Exchange. While
the change will require Members to
further increase their participation as
compared to the September 2015
baseline in order to receive the same
rebate, the Exchange believes that such
proposed rebates remain consistent with
pricing previously offered by the
Exchange as well as competitors of the
Exchange and does not represent a
significant departure from the
Exchange’s general pricing structure and
will act to incentivize such Members to
increase participation on the Exchange,
thereby enhancing liquidity and market
quality on the Exchange for all
participants. The Exchange also believes
that the proposed rebate remains
consistent with pricing previously
offered by the Exchange as well as
competitors of the Exchange and does
not represent a significant departure
from the Exchange’s general pricing
structure.
Customer Non-Penny Pilot Add Volume
Tier
The Exchange believes that its
proposal to create a new tier under
which Customer orders that add
liquidity in Non-Penny Pilot Securities
would receive $1.00 per contract where
the Member has an ADAV in Customer
orders equal to or greater than 0.70% of
average TCV is reasonable, fair and
equitable and non-discriminatory, for
the reasons set forth above with respect
to volume-based pricing generally,
because such change will apply equally
to all participants, and because the
change will incentivize such
participants to further contribute to
market quality on the Exchange.
Moreover, the proposed change will
provide Members with an increased
incentive to add liquidity in Customer
orders, which the Exchange not only
believes will enhance market quality for
all market participants, but will also
encourage increased participation of
Non-Customer orders wanting to
interact with such Customer orders,
further to the benefit of all market
participants. The Exchange also believes
that the proposed rebate remains
consistent with pricing previously
offered by the Exchange as well as
competitors of the Exchange, in
particular those of Nasdaq Options
Market LLC, which currently offers a
rebate of up to $1.00 for Customer
orders in Non-Penny Pilot Securities,
and does not represent a significant
departure from the Exchange’s general
pricing structure.
New Non-Customer Take Volume Tier
The Exchange believes that its
proposal to add a new tier under
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
13863
footnote 3 under which the Exchange
would charge $0.47 per contract for a
Non-Customer order to remove liquidity
in Penny Pilot Securities where the
Member has an ADAV in Customer
orders equal to or greater than 1.00% of
average TCV is reasonable, fair and
equitable and non-discriminatory, for
the reasons set forth above with respect
to volume-based pricing generally,
because such change will apply equally
to all participants, and because the
change will incentivize such
participants to further contribute to
market quality on the Exchange.
Moreover, the proposed enhanced
rebate will provide Members with an
increased incentive to add liquidity in
Customer orders, which the Exchange
not only believes will enhance market
quality for all market participants, but
will also encourage increased
participation of Non-Customer orders
wanting to interact with such Customer
orders, further to the benefit of all
market participants. The Exchange also
believes that the proposed fee remains
consistent with pricing previously
offered by the Exchange as well as
competitors of the Exchange and does
not represent a significant departure
from the Exchange’s general pricing
structure. The Exchange also believes
that the clarifying numbering change
associated with this change is
reasonable, fair and equitable and nondiscriminatory because it is nonsubstantive and is designed to make
sure that the fee schedule is as clear and
easily understandable as possible.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes the proposed
amendments to its fee schedule would
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
To the contrary, the Exchange has
designed the proposed amendments to
its fee schedule in order to enhance its
ability to compete with other exchanges.
Rather, the proposal as a whole is a
competitive proposal that is seeking
further the growth of the Exchange. The
Exchange has structured the proposed
fees and rebates to attract certain
additional volume in both Customer and
certain Non-Customer orders, however,
the Exchange believes that its pricing for
all capacities is competitive with that
offered by other options exchanges.
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
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Federal Register / Vol. 81, No. 50 / Tuesday, March 15, 2016 / Notices
maintain their competitive standing in
the financial markets. 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 changes to the
Exchange’s tiered pricing structure
burdens competition, but instead,
enhances competition as it is intended
to increase the competitiveness of the
Exchange. Also, the Exchange believes
that the price changes contribute to,
rather than burden competition, as such
changes are broadly intended to
incentivize participants to increase their
participation on the Exchange, which
will increase the liquidity and market
quality on the Exchange, which will
then further enhance the Exchange’s
ability to compete with other exchanges.
(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 15 and paragraph (f) of Rule
19b–4 thereunder.16 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:
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–2016–26. 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 will also 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–
2016–26 and should be submitted on or
before April 5, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–05751 Filed 3–14–16; 8:45 am]
BILLING CODE 8011–01–P
asabaliauskas on DSK3SPTVN1PROD with NOTICES
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–2016–26 on the subject line.
15 15
16 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
17:40 Mar 14, 2016
[Release No. 34–77334; File No. SR–ISE
Gemini–2016–02]
Self-Regulatory Organizations; ISE
Gemini, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Limit Mandatory
Participation in Scheduled Functional
and Performance Testing Under
Regulation SCI to Only Those Primary
Market Makers That Meet Specified
Criteria
March 9, 2016.
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
26, 2016, ISE Gemini, LLC (the
‘‘Exchange’’ or the ‘‘ISE Gemini’’) filed
with the Securities and Exchange
Commission the proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 803, Obligations of Market Makers,
to limit mandatory participation in
scheduled functional and performance
testing, under Regulation Systems
Compliance and Integrity (‘‘Regulation
SCI’’),3 to those Primary Market Makers
(‘‘PMMs’’) that contribute a meaningful
percentage of the Exchange’s overall
volume, measured on a quarterly or
monthly basis. The Exchange proposes
to also consider other factors in
determining the PMMs that will be
required to participate in scheduled
functional and performance testing of
the Exchange’s business continuity and
disaster recovery plans (collectively
‘‘DR Plans’’), including average daily
volume traded on the Exchange
measured on a quarterly or monthly
basis, or PMMs that collectively account
for a certain percentage of market share
on the Exchange or within a specific
product. In addition, the Exchange
proposes to publish the criteria to be
used by the Exchange to determine
which PMMs will be required to
participate in such testing, and notify
those PMMs that are required to
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 73639
(November 19, 2014), 79 FR 72252 (December 5,
2014) (‘‘SCI Adopting Release’’).
2 17
17 17
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COMMISSION
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Agencies
[Federal Register Volume 81, Number 50 (Tuesday, March 15, 2016)]
[Notices]
[Pages 13861-13864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-05751]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77330; File No. SR-BATS-2016-26]
Self-Regulatory Organizations; Bats BZX Exchange, Inc. f/k/a BATS
Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc.
March 9, 2016.
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 1, 2016, Bats BZX Exchange, Inc. f/k/a 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\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ and non-members of the Exchange pursuant to BZX Rules
15.1(a) and (c).
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\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).
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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 applicable to the
Exchange's options platform to: (i) Modify the standard fees for both
[[Page 13862]]
Customer \6\ and Non-Customer \7\ orders that remove liquidity in Non-
Penny Pilot Securities; \8\ (ii) modify the standard fees for Customer
orders that remove liquidity in Penny Pilot Securities; \9\ (iii) amend
the criteria necessary to meet and the rebate associated with the
Customer Add Volume Tier 4; (iv) amend the criteria necessary to meet
the Customer Step-Up Volume Tier; (v) add a new footnote 12 entitled
Customer Non-Penny Pilot Add Volume Tier; and (vi) add a new Non-
Customer Take Volume Tier under footnote 3.
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\6\ As defined in the Exchange's fee schedule available at
https://www.batsoptions.com/support/fee_schedule/bzx/.
\7\ Id.
\8\ Id.
\9\ Id.
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Removing Liquidity in Non-Penny Pilot Securities
The Exchange is proposing to modify the standard fees for both
Customer and Non-Customer orders that remove liquidity in Non-Penny
Pilot Securities under fee codes NC and NP, respectively. Specifically,
the Exchange is proposing to increase the standard fee for Customer
orders that remove liquidity in Non-Penny Pilot Securities under fee
code NC from $0.84 to $0.85 per contract and the standard fee for Non-
Customer orders that remove liquidity in Non-Penny Pilot Securities
under fee code NP from $0.89 to $0.94 per contract.
Customer Orders That Remove Liquidity in Penny Pilot Securities
The Exchange is proposing to modify the standard fees for Customer
orders that remove liquidity in Penny Pilot Securities under fee code
PC. Specifically, the Exchange is proposing to increase the standard
fee for Customer orders that remove liquidity in Penny Pilot Securities
under fee code PC from $0.46 to $0.48 per contract.
Customer Add Volume Tier 4
The Exchange is proposing to amend the criteria necessary to meet
and the rebate associated with the Customer Add Volume Tier 4 under
footnote 1, which currently provides Members with a rebate of $0.50 per
contract for Customer orders that add liquidity in Penny Pilot
Securities where the Member has an ADAV \10\ equal to or greater than
0.85% of average TCV.\11\ Specifically, the Exchange is proposing to
amend Customer Add Volume Tier 4 such that a Member will receive a
$0.52 rebate for Customer orders that add liquidity in Penny Pilot
Securities where the Member has an ADAV in Customer orders equal to or
greater than 1.00% of average TCV.
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\10\ Id.
\11\ Id.
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Customer Step-Up Volume Tier
The Exchange is proposing to amend the criteria necessary to meet
the Customer Step-Up Volume Tier, which currently provides Members with
a rebate of $0.53 per contract where the Member has an Options Step-Up
Add TCV \12\ in Customer orders from September 2015 baseline equal to
or greater than 0.35%. Specifically, the Exchange is proposing to
continue offering a rebate of $0.53 per contract where the Member has
an Options Step-Up Add TCV in Customer orders from September 2015
baseline equal to or greater than 0.40%.
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\12\ Id.
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Customer Non-Penny Pilot Add Volume Tier
The Exchange is proposing to create a new footnote 12 entitled
``Customer Non-Penny Pilot Add Volume Tier,'' which would apply to
orders that receive fee code NY. Under the proposed new tier, Customer
orders that add liquidity in Non-Penny Pilot Securities would receive
$1.00 per contract where the Member has an ADAV in Customer orders
equal to or greater than 0.70% of average TCV.
New Non-Customer Take Volume Tier
The Exchange is proposing to add a new Non-Customer Take Volume
Tier under footnote 3. Under the new Non-Customer Take Volume Tier 3,
the Exchange would charge $0.47 per contract for a Non-Customer order
to remove liquidity in Penny Pilot Securities where the Member has an
ADAV in Customer orders equal to or greater than 1.00% of average TCV.
In conjunction with this proposed change, the Exchange is proposing to
change current Non-Customer Take Volume Tier 3 to Non-Customer Take
Volume Tier 4.
Implementation Date
The Exchange proposes to implement these amendments to its fee
schedule on March 1, 2016.
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.\13\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\14\ 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 to be
excessive.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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Volume-based rebates such as those currently maintained on the
Exchange 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.
Removing Liquidity in Non-Penny Pilot Securities
The Exchange believes that its proposal to change the standard fee
charged for Customer orders that remove liquidity in Non-Penny Pilot
Securities from $0.84 to $0.85 per contract and the standard fee for
Non-Customer orders that remove liquidity in Non-Penny Pilot Securities
under fee code NP from $0.89 to $0.94 per contract is reasonable, fair
and equitable and non-discriminatory, for the reasons set forth above
with respect to volume-based pricing generally, because the change will
apply equally to all participants, and because, while the change marks
an increase in fees for orders in Non-Penny Pilot Securities, such
proposed fees remain consistent with pricing previously offered by the
Exchange as well as competitors of the Exchange and does not represent
a significant departure from the Exchange's general pricing structure
and will allow the Exchange to earn additional revenue that can be used
to offset the addition of new pricing incentives, including those
introduced as part of this proposal.
Customer Orders That Remove Liquidity in Penny Pilot Securities
The Exchange believes that its proposal to increase the standard
fees for Customer orders that remove liquidity in Penny Pilot
Securities from $0.46 to $0.48 per contract is
[[Page 13863]]
reasonable, fair and equitable and non-discriminatory, for the reasons
set forth above with respect to volume-based pricing generally, because
such change will apply equally to all participants, and because, while
the change marks an increase in fees for such orders, such proposed
fees remain consistent with pricing previously offered by the Exchange
as well as competitors of the Exchange and does not represent a
significant departure from the Exchange's general pricing structure and
will allow the Exchange to earn additional revenue that can be used to
offset the addition of new pricing incentives, including those
introduced as part of this proposal.
Customer Add Volume Tier 4
The Exchange believes that its proposal to amend Customer Add
Volume Tier 4 such that a Member will receive a $0.52 rebate for
Customer orders that add liquidity in Penny Pilot Securities where the
Member has an ADAV in Customer orders equal to or greater than 1.00% of
average TCV is reasonable, fair and equitable and non-discriminatory,
for the reasons set forth above with respect to volume-based pricing
generally and because such change will apply equally to all
participants and will incentivize such participants to further
contribute to market quality on the Exchange. Moreover, the proposed
change will provide Members with an increased incentive (increasing the
rebate from $0.50 to $0.52 per contract) to add liquidity in Customer
orders, which the Exchange not only believes will enhance market
quality for all market participants, but will also encourage increased
participation of Non-Customer orders wanting to interact with such
Customer orders, further to the benefit of all market participants. The
Exchange also believes that the proposed rebate remains consistent with
pricing previously offered by the Exchange as well as competitors of
the Exchange and does not represent a significant departure from the
Exchange's general pricing structure.
Customer Step-Up Volume Tier
The Exchange believes that its proposal to increase the Options
Step-Up Add TCV in Customer orders from September 2015 baseline to
0.40% in order to receive a rebate of $0.53 is reasonable, fair and
equitable and non-discriminatory, for the reasons set forth above with
respect to volume-based pricing generally and because such change will
apply equal to all participants and incentivize such participants to
further contribute to market quality on the Exchange. While the change
will require Members to further increase their participation as
compared to the September 2015 baseline in order to receive the same
rebate, the Exchange believes that such proposed rebates remain
consistent with pricing previously offered by the Exchange as well as
competitors of the Exchange and does not represent a significant
departure from the Exchange's general pricing structure and will act to
incentivize such Members to increase participation on the Exchange,
thereby enhancing liquidity and market quality on the Exchange for all
participants. The Exchange also believes that the proposed rebate
remains consistent with pricing previously offered by the Exchange as
well as competitors of the Exchange and does not represent a
significant departure from the Exchange's general pricing structure.
Customer Non-Penny Pilot Add Volume Tier
The Exchange believes that its proposal to create a new tier under
which Customer orders that add liquidity in Non-Penny Pilot Securities
would receive $1.00 per contract where the Member has an ADAV in
Customer orders equal to or greater than 0.70% of average TCV is
reasonable, fair and equitable and non-discriminatory, for the reasons
set forth above with respect to volume-based pricing generally, because
such change will apply equally to all participants, and because the
change will incentivize such participants to further contribute to
market quality on the Exchange. Moreover, the proposed change will
provide Members with an increased incentive to add liquidity in
Customer orders, which the Exchange not only believes will enhance
market quality for all market participants, but will also encourage
increased participation of Non-Customer orders wanting to interact with
such Customer orders, further to the benefit of all market
participants. The Exchange also believes that the proposed rebate
remains consistent with pricing previously offered by the Exchange as
well as competitors of the Exchange, in particular those of Nasdaq
Options Market LLC, which currently offers a rebate of up to $1.00 for
Customer orders in Non-Penny Pilot Securities, and does not represent a
significant departure from the Exchange's general pricing structure.
New Non-Customer Take Volume Tier
The Exchange believes that its proposal to add a new tier under
footnote 3 under which the Exchange would charge $0.47 per contract for
a Non-Customer order to remove liquidity in Penny Pilot Securities
where the Member has an ADAV in Customer orders equal to or greater
than 1.00% of average TCV is reasonable, fair and equitable and non-
discriminatory, for the reasons set forth above with respect to volume-
based pricing generally, because such change will apply equally to all
participants, and because the change will incentivize such participants
to further contribute to market quality on the Exchange. Moreover, the
proposed enhanced rebate will provide Members with an increased
incentive to add liquidity in Customer orders, which the Exchange not
only believes will enhance market quality for all market participants,
but will also encourage increased participation of Non-Customer orders
wanting to interact with such Customer orders, further to the benefit
of all market participants. The Exchange also believes that the
proposed fee remains consistent with pricing previously offered by the
Exchange as well as competitors of the Exchange and does not represent
a significant departure from the Exchange's general pricing structure.
The Exchange also believes that the clarifying numbering change
associated with this change is reasonable, fair and equitable and non-
discriminatory because it is non-substantive and is designed to make
sure that the fee schedule is as clear and easily understandable as
possible.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed amendments to its fee schedule
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
the Exchange has designed the proposed amendments to its fee schedule
in order to enhance its ability to compete with other exchanges.
Rather, the proposal as a whole is a competitive proposal that is
seeking further the growth of the Exchange. The Exchange has structured
the proposed fees and rebates to attract certain additional volume in
both Customer and certain Non-Customer orders, however, the Exchange
believes that its pricing for all capacities is competitive with that
offered by other options exchanges. 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
[[Page 13864]]
maintain their competitive standing in the financial markets.
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 changes to the
Exchange's tiered pricing structure burdens competition, but instead,
enhances competition as it is intended to increase the competitiveness
of the Exchange. Also, the Exchange believes that the price changes
contribute to, rather than burden competition, as such changes are
broadly intended to incentivize participants to increase their
participation on the Exchange, which will increase the liquidity and
market quality on the Exchange, which will then further enhance the
Exchange's ability to compete with other exchanges.
(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 \15\ and paragraph (f) of Rule 19b-4
thereunder.\16\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BATS-2016-26 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-2016-26. 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 will also 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-2016-26 and should be
submitted on or before April 5, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-05751 Filed 3-14-16; 8:45 am]
BILLING CODE 8011-01-P