Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Its Equity Options Platform, 21405-21408 [2016-08185]
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Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices
request for Office of Management and
Budget approval. All comments will
become a matter of public record. The
public is invited to submit comments
concerning: (a) Whether the collection
of information is necessary for the
proper performance of the function of
the agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
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(c) ways to enhance the quality, utility,
and clarity of the information to be
collected; and (d) ways to minimize the
burden of the collection of the
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including the use of automated
collection techniques or other forms of
information technology.
By Gerard Poliquin, Secretary of the Board,
the National Credit Union Administration, on
April 6, 2016.
Dated: April 6, 2016.
Dawn D. Wolfgang,
NCUA PRA Clearance Officer.
[FR Doc. 2016–08224 Filed 4–8–16; 8:45 am]
BILLING CODE 7535–01–P
NATIONAL SCIENCE FOUNDATION
Wireless Spectrum Sharing:
Enforcement Frameworks,
Technology, and R&D Workshop
The National Coordination
Office (NCO) for Networking and
Information Technology Research and
Development (NITRD).
ACTION: Notice.
AGENCY:
This workshop will focus on
spectrum sharing enforcement issues
and will provide a forum for
information exchange and the
identification of relevant research and
development opportunities.
DATES: May 5, 2016.
FOR FURTHER INFORMATION CONTACT:
Wendy Wigen at 703–292–4873 or
wigen@nitrd.gov. Individuals who use a
telecommunications device for the deaf
(TDD) may call the Federal Information
Relay Service (FIRS) at 1–800–877–8339
between 8 a.m. and 8 p.m., Eastern time,
Monday through Friday.
SUPPLEMENTARY INFORMATION:
Registration: The event has a limited
capacity and registration must be
received in advance to be admitted to
the facility. No onsite registration will
be available. Registration will end on
April 25, 2016 or when we reach
capacity. However, the event will be
webcast and the video will be available
after the event. Further information,
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SUMMARY:
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including registration and links to the
webcast are available at: https://
www.nitrd.gov/nitrdgroups/
index.php?title=WSRD_Workshop_VIII_
-_Wireless_Spectrum_Sharing.
Overview: Enforcement needs for
wireless spectrum sharing extends well
beyond just the enforcement of usage
rights (i.e. interference protection). A
complete enforcement regime (1) should
explicitly recognize that enforcement
requirements are bi-lateral (i.e., apply to
the primary user as well as the
secondary user), and (2) should also
include the collective action rights—
which encompass management rights
(determining which users get to transmit
when), exclusion rights (who gets to
transmit at all) and alienation rights
(who gets to sell the resource). To
support a dynamic spectrum sharing
environment, consistent and sustainable
technology mechanisms are needed to
monitor, detect, evaluate or adjudicate,
classify, inform, and enforce compliance
of the enforcement regime. Enforcement
frameworks can rely on central
architectures based on data clouds or
device level distributed architectures, or
a combination of both. This may entail
adopting new standards or developing
automated enforcement mechanisms
and compliance certification methods
for next-generation technologies to
support the enforcement regime. Other
issues to be considered include
enforcement-related privacy and
security issues, and the economic
tradeoffs in ex ante and ex post
enforcement mechanisms. The main
goals of this workshop are to:
• Outline the wireless spectrum
sharing enforcement needs, scenarios
and issues for the short-term and longterm, from multiple perspectives.
• Discuss the architectural, economic,
regulatory and business frameworks that
can deliver enforcement solutions.
• Identify innovative tools,
techniques and database requirements
for additional research.
• Develop ideas for advanced R&D to
help inform WSRD recommendations to
the OSTP.
Background: This workshop series
stems from the Presidential
memorandum issued on June 14, 2013,
Expanding America’s Leadership in
Wireless Innovation and has focused on
ways to make more wireless spectrum
available by encouraging shared access
by commercial and Federal users. As
with any sharing environment, such as
the way aircraft share airspace or
vehicles share the roads, underlying
enforcement principles for spectrum
sharing are critical. Industry and
government innovators agree that
enforcement is a necessary component
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21405
for any dynamic spectrum sharing
environment to be meaningful and
effective.
Submitted by the National Science
Foundation for the National
Coordination Office (NCO) for
Networking and Information
Technology Research and Development
(NITRD) on April 5, 2016.
Suzanne H. Plimpton,
Reports Clearance Officer, National Science
Foundation.
[FR Doc. 2016–08192 Filed 4–8–16; 8:45 am]
BILLING CODE 7555–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77526; File No. SR–
BatsEDGX–2016–05]
Self-Regulatory Organizations; Bats
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Related to Fees
for Its Equity Options Platform
April 5, 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 31,
2016, Bats EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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 EDGX Rules
15.1(a) and (c).
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 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).
2 17
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Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices
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
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The Exchange proposes to amend its
fee schedule (‘‘Fee Schedule’’) for its
equity options platform (‘‘EDGX
Options’’) to add the definitions of
‘‘Appointed MM’’ and ‘‘Appointed
OEF’’, effective April 1, 2016, which
would increase opportunities for firms
to qualify for tiered pricing on EDGX
Options. Specifically, the Exchange
proposes to allow a Market Maker to
designate an Order Entry Firm (‘‘OEF’’)
as its ‘‘Appointed OEF’’ and for an OEF
to designate a Market Maker as its
‘‘Appointed MM,’’ for purposes of the
Fee Schedule. Members of EDGX
Options would effectuate such
designation by completing and sending
an executed Volume Aggregation and
Execution Detail Request form by email
to the Exchange.6 As specified in the
proposed Fee Schedule, the Exchange
would view the transmittal of the
completed form as acceptance of such
an appointment.7 The proposed new
concepts would be applicable to all
tiered pricing offered by the Exchange,
and are designed to increase
6 See proposed language for ‘‘Designating an
Appointed OEF/Appointed MM’’ under
‘‘Definitions’’ section of the Fee Schedule. Members
should direct their executed forms to
membershipservices@bats.com.
7 The Exchange further notes that, as proposed,
the Exchange would only recognize one such
designation for each party once every 12 months,
which designation would remain in effect unless or
until the Exchange receives written notice from
either party indicating that the appointment has
been terminated. Id.
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opportunities for firms to qualify for
such tiers.
The Exchange currently offers tiers as
described in the footnotes section of the
Fee Schedule. Under the current tiers,
Members that achieve certain volume
criteria may qualify for reduced fees or
enhanced rebates for Customer 8 and
Market Maker 9 orders. In connection
with such tiers, the Exchange calculates
on a monthly basis a Member’s ADV 10
in Customer orders and Market Maker
orders, respectively, as a percentage of
average TCV.11 Upon reaching a volume
threshold that qualifies a Member for a
specified tier, a Member receives the
enhanced rebate or reduced fee
associated with the highest tier achieved
for each eligible contract executed on
the Exchange. Under the Exchange’s
current Fee Schedule, a Member is
permitted to aggregate volume with
other Members that control, are
controlled by, or are under common
control with such Member. Thus,
Members that act as OEFs with affiliated
broker-dealers that are Market Makers
on the Exchange, and vice-versa, may be
able to qualify for certain pricing
incentives offered by the Exchange
based on such affiliation and
aggregation.
The proposal would be available to all
Market Makers and OEFs. Specifically,
the proposed changes would enable any
Market Maker to qualify an Appointed
OEF for purposes of volume-based tiers
on the Exchange. In this regard, the
proposed change would enable a Market
Maker without an affiliated OEF—or
with an affiliated OEF that doesn’t meet
the volume requirements for tiered
pricing—to enter into a relationship
with an Appointed OEF. Similarly, as
proposed, an OEF, by virtue of
designating an Appointed MM, would
be able to aggregate its own Customer
volume with the activity of its
Appointed MM, which would enhance
8 The term ‘‘Customer’’ applies to any transaction
identified by a Member for clearing in the Customer
range at the Options Clearing Corporation (‘‘OCC’’),
excluding any transaction for a Broker Dealer or a
‘‘Professional’’ as defined in Exchange Rule 16.1.
9 The term ‘‘Market Maker’’ applies to any
transaction identified by a Member for clearing in
the Market Maker range at the OCC, where such
Member is registered with the Exchange as a Market
Maker as defined in Rule 16.1(a)(37).
10 ‘‘ADV’’ means average daily volume calculated
as the number of contracts added or removed,
combined, per day.
11 ‘‘TCV’’ means total consolidated volume
calculated as the volume reported by all exchanges
to the consolidated transaction reporting plan for
the month for which the fees apply, excluding
volume on any day that the Exchange experiences
an Exchange System Disruption and on any day
with a scheduled early market close.
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the OEF’s potential to qualify for tiered
pricing.12
Thus, the proposed changes would
enable firms that may not currently be
eligible for tiered pricing incentives to
avail themselves of such incentives as
well as to assist firms that are currently
eligible for such incentives to
potentially achieve a higher tier, thus
qualifying for higher rebates or reduced
fees. The Exchange believes these
proposed changes would incentivize
firms to direct their order flow to the
Exchange to the benefit of all market
participants. Further, the Exchange
believes that the proposed changes
would encourage Market Maker firms to
increase their participation on the
Exchange, which would increase capital
commitment and liquidity on the
Exchange to the benefit of all market
participants.
As proposed, the Exchange would
only process one designation of an
Appointed OEF and Appointed MM per
year, which designation would remain
in effect unless or until the parties
informed the Exchange of its
termination.13 The Exchange believes
that this requirement would impose a
measure of exclusivity and would
enable both parties to rely upon each
other’s transaction volumes executed on
the Exchange, and potentially increase
such volumes, which is beneficial to all
Exchange participants.
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.14
Specifically, the Exchange believes that
the proposed rule change is consistent
with Section 6(b)(4) of the Act,15 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 believes that its
proposed fees and rebates are
12 An OEF that has both an Appointed MM and
an affiliated Market Maker may only aggregate
volumes with one of these two, not both.
Specifically, the Exchange proposes to specify in
the definitions section that that ‘‘[w]ith prior notice
to the Exchange, a Member may aggregate ADAV or
ADV with other Members that control, are
controlled by, or are under common control with
such Member or who have been appointed as an
Appointed OEF or Appointed OEF.’’ See proposed
Fee Schedule, ‘‘Definitions’’, emphasis added.
13 See supra, note 7.
14 15 U.S.C. 78f.
15 15 U.S.C. 78f(b)(4).
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Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices
reasonable, fair and equitable, and nondiscriminatory for the following
reasons. First, the proposal would be
available to all Market Makers and OEFs
and the decision to be designated as an
‘‘Appointed OEF’’ or ‘‘Appointed MM’’
is completely voluntary and Members
may elect to accept this appointment or
not. In addition, the proposed changes
would enable firms that are not
currently eligible for tiered pricing to
avail themselves such pricing as well as
to assist firms that are currently eligible
for such tiers to potentially achieve a
higher tier, thus qualifying for higher
rebates or lower fees. The Exchange
believes these proposed changes would
incentivize firms to direct their order
flow to the Exchange. Specifically, the
proposed changes would enable any
Market Maker to qualify its Appointed
OEF for purposes of tiered pricing.
Moreover, the proposed change would
allow any OEF, by virtue of designating
an Appointed MM, to aggregate its own
Customer volume with the activity of its
Appointed MM, which would enhance
the OEF’s potential to qualify for
enhanced rebates or reduced fees. The
Exchange believes these proposed
changes would incentivize Appointed
OEFs with an Appointed MM to direct
their order flow to the Exchange, which
increase in orders routed to the
Exchange would benefit all market
participants by expanding liquidity and
providing more trading opportunities on
the Exchange. Similarly, the Exchange
believes these proposed changes would
incentivize Appointed MMs with an
Appointed OEF to increase their
participation on the Exchange, which
would increase capital commitment and
liquidity and decrease spreads on the
Exchange to the benefit of all market
participants. The Exchange believes
that, similar to volume based tiers
offered by the Exchange, the benefits of
the proposal extend to all market
participants based on the increased
quality of liquidity on the Exchange,
including those market participants that
opt not to become an Appointed OEF or
Appointed MM.
Further, the Exchange believes that
the proposal is reasonable and equitably
allocated because it is beneficial to all
Exchange participants based on the fact
that it enables parties to rely upon each
other’s transaction volumes executed on
the Exchange, and potentially increase
such volumes. In turn, as above, the
potential increase in order flow, capital
commitment and resulting liquidity on
the Exchange would benefit all market
participants by expanding liquidity,
providing more trading opportunities
and tighter spreads. The proposal is also
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reasonable, equitable and not unfairly
discriminatory because the Exchange
would only process one designation of
an Appointed OEF and Appointed MM
per year, which requirement would
impose a measure of exclusivity while
allowing both parties to rely upon each
other’s transaction volumes executed on
the Exchange, and potentially increase
such volumes, again, to the benefit of all
market participants. Finally, the
Exchange believes the proposal is
reasonable, equitable and not unfairly
discriminatory as it may encourage an
increase in orders routed to the
Exchange, which would expand
liquidity and provide more trading
opportunities and tighter spreads to the
benefit of all market participants, even
to those market participants that are
either currently affiliated by virtue of
their common ownership or that opt not
to become an Appointed OEF or
Appointed MM under this proposal.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed amendments to its fee
schedule would impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. The Exchange
believes that the proposed changes are
pro-competitive as they would increase
opportunities for firms to qualify for
tiered pricing on the Exchange, which
may increase intermarket and
intramarket competition by incenting
participants to direct their orders to the
Exchange thereby increasing the volume
of contracts traded on the Exchange and
enhancing the quality of quoting.
Enhanced market quality and increased
transaction volume that results from the
anticipated increase in order flow
directed to the Exchange would benefit
all market participants and improve
competition on the Exchange. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues. In such an
environment, the Exchange must
continually review, and consider
adjusting, its fees and rebates to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
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21407
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 16 and paragraph (f) of Rule
19b–4 thereunder.17 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 rulecomments@sec.gov. Please include File
Number SR–BatsEDGX–2016–05 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–BatsEDGX–2016–05. 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
16 15
17 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices
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–
BatsEDGX–2016–05 and should be
submitted on or before May 2, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–08185 Filed 4–8–16; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–77527; File No. SR–CHX–
2016–04]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
the Rules of the Exchange Related to
Market Makers
April 5, 2016.
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Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 2 thereunder,
notice is hereby given that on March 30,
2016, the Chicago Stock Exchange, Inc.
(‘‘CHX’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and III below, which Items have
been prepared by the Exchange. 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
CHX proposes to amend the Rules of
the Exchange (‘‘CHX Rules’’) related to
Market Makers. CHX has designated this
proposed rule change as noncontroversial pursuant to Section
19(b)(3)(A) 3 of the Act and Rule 19b–
4(f)(6) 4 thereunder and has provided
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
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18:37 Apr 08, 2016
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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes 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
CHX has prepared summaries, set forth
in sections A, B and C below, of the
most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Changes
SECURITIES AND EXCHANGE
COMMISSION
18 17
the Commission with the notice
required by Rule 19b–4(f)(6)(iii).5
The text of this proposed rule change
is available on the Exchange’s Web site
at (www.chx.com) and in the
Commission’s Public Reference Room.
1. Purpose
The Exchange proposes to amend
various CHX Rules related to Market
Makers. The proposed rule change
primarily addresses Market Maker
application, registration and securities
assignment procedures. Specifically, the
Exchange proposes to consolidate and/
or clarify certain rules under Article 16
(Market Makers); to adopt new rules
under Article 16 that are similar to rules
of other national securities exchanges;
to make corresponding amendments to
various CHX Rules impacted by the
proposed amendments to Article 16;
and to make other clarifying
amendments throughout the CHX Rules,
as described below. Notwithstanding
the proposed amendments, the
Exchange proposes to largely maintain
the current requirements regarding
Market Maker responsibilities (Article
16, Rule 8); limitation on dealings
(Article 16, Rule 9); and reporting of
positions (Article 16, Rule 10).
Current Article 16 (Market Makers)
Current Article 16 consists of the
following rules:
• Rule 1. Registration and Appointment
• Rule 2. Initial Registration of Market
Makers
• Rule 3. Approval by the Exchange
• Rule 4. Temporary Appointment of
Market Maker
• Rule 5. Identification of Securities
Traded as Market Maker
• Rule 6. Voluntary De-Registration as
Market Maker
5 17
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• Rule 7. Involuntary De-Registration as
Market Maker
• Rule 8. Responsibilities
• Rule 9. Limitation on Dealings
• Rule 10. Reporting of Position
Information
Currently, a Participant may act as a
Market Maker in a particular security
only if it has registered with, and been
approved by, the Exchange to act in that
capacity, and is in good standing.6 A
Participant who wishes to register as a
Market Maker must complete a Market
Maker application,7 which will be
reviewed by the Exchange.8
The Exchange will announce the
names of all successful Participant
applicants.9 However, if the Exchange
denies a Participant’s Market Maker
application, it will provide the
Participant with a summary of the
Exchange’s reasons for the denial.10 A
Participant may seek review of its
denied Market Maker application.11 The
Exchange also reserves the right to
expedite the Market Maker application
process and appoint a Market Maker on
a temporary basis.12 A Participant’s
registration as a Market Maker may be
-1- involuntarily terminated or
suspended by the Exchange 13 or -2voluntarily terminated at the request of
Participant.14
Once approved, a Market Maker may
then select securities in which it seeks
to acts as Market Maker by notifying the
Exchange in a manner prescribed by the
Exchange.15 Any decision to add or
drop securities from its existing
selection must be communicated to the
Exchange no later than 9 a.m. on the
trading day immediately preceding the
date on which the change is to take
effect, unless the Exchange permits a
later date and/or time.16 A Market
Maker’s decision to voluntarily add or
drop securities from its existing
selection are effective without approval;
provided a Market Maker must seek
prior Exchange approval for an initial
request to trade more than 500 securities
and each request to trade each
increment of an additional 100
securities after that threshold is
reached.17 Except for temporary and/or
partial de-registrations approved by the
Exchange, a Market Maker may not re6 See
CHX Article 16, Rule 1(a).
CHX Article 16, Rule 2(b).
8 See CHX Article 16, Rule 3.
9 See CHX Article 16, Rule 2(d).
10 See id.
11 See id.
12 See CHX Article 16, Rule 4.
13 See CHX Article 16, Rule 7.
14 See CHX Article 16, Rules 5 and 6.
15 See CHX Article 16, Rule 5.
16 See id.
17 See paragraph .01 of CHX Article 16, Rule 5.
7 See
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]]>Agencies
[Federal Register Volume 81, Number 69 (Monday, April 11, 2016)]
[Notices]
[Pages 21405-21408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08185]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77526; File No. SR-BatsEDGX-2016-05]
Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change Related
to Fees for Its Equity Options Platform
April 5, 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 31, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of 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 EDGX 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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[[Page 21406]]
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 its fee schedule (``Fee Schedule'')
for its equity options platform (``EDGX Options'') to add the
definitions of ``Appointed MM'' and ``Appointed OEF'', effective April
1, 2016, which would increase opportunities for firms to qualify for
tiered pricing on EDGX Options. Specifically, the Exchange proposes to
allow a Market Maker to designate an Order Entry Firm (``OEF'') as its
``Appointed OEF'' and for an OEF to designate a Market Maker as its
``Appointed MM,'' for purposes of the Fee Schedule. Members of EDGX
Options would effectuate such designation by completing and sending an
executed Volume Aggregation and Execution Detail Request form by email
to the Exchange.\6\ As specified in the proposed Fee Schedule, the
Exchange would view the transmittal of the completed form as acceptance
of such an appointment.\7\ The proposed new concepts would be
applicable to all tiered pricing offered by the Exchange, and are
designed to increase opportunities for firms to qualify for such tiers.
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\6\ See proposed language for ``Designating an Appointed OEF/
Appointed MM'' under ``Definitions'' section of the Fee Schedule.
Members should direct their executed forms to
membershipservices@bats.com.
\7\ The Exchange further notes that, as proposed, the Exchange
would only recognize one such designation for each party once every
12 months, which designation would remain in effect unless or until
the Exchange receives written notice from either party indicating
that the appointment has been terminated. Id.
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The Exchange currently offers tiers as described in the footnotes
section of the Fee Schedule. Under the current tiers, Members that
achieve certain volume criteria may qualify for reduced fees or
enhanced rebates for Customer \8\ and Market Maker \9\ orders. In
connection with such tiers, the Exchange calculates on a monthly basis
a Member's ADV \10\ in Customer orders and Market Maker orders,
respectively, as a percentage of average TCV.\11\ Upon reaching a
volume threshold that qualifies a Member for a specified tier, a Member
receives the enhanced rebate or reduced fee associated with the highest
tier achieved for each eligible contract executed on the Exchange.
Under the Exchange's current Fee Schedule, a Member is permitted to
aggregate volume with other Members that control, are controlled by, or
are under common control with such Member. Thus, Members that act as
OEFs with affiliated broker-dealers that are Market Makers on the
Exchange, and vice-versa, may be able to qualify for certain pricing
incentives offered by the Exchange based on such affiliation and
aggregation.
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\8\ The term ``Customer'' applies to any transaction identified
by a Member for clearing in the Customer range at the Options
Clearing Corporation (``OCC''), excluding any transaction for a
Broker Dealer or a ``Professional'' as defined in Exchange Rule
16.1.
\9\ The term ``Market Maker'' applies to any transaction
identified by a Member for clearing in the Market Maker range at the
OCC, where such Member is registered with the Exchange as a Market
Maker as defined in Rule 16.1(a)(37).
\10\ ``ADV'' means average daily volume calculated as the number
of contracts added or removed, combined, per day.
\11\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges to the consolidated transaction
reporting plan for the month for which the fees apply, excluding
volume on any day that the Exchange experiences an Exchange System
Disruption and on any day with a scheduled early market close.
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The proposal would be available to all Market Makers and OEFs.
Specifically, the proposed changes would enable any Market Maker to
qualify an Appointed OEF for purposes of volume-based tiers on the
Exchange. In this regard, the proposed change would enable a Market
Maker without an affiliated OEF--or with an affiliated OEF that doesn't
meet the volume requirements for tiered pricing--to enter into a
relationship with an Appointed OEF. Similarly, as proposed, an OEF, by
virtue of designating an Appointed MM, would be able to aggregate its
own Customer volume with the activity of its Appointed MM, which would
enhance the OEF's potential to qualify for tiered pricing.\12\
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\12\ An OEF that has both an Appointed MM and an affiliated
Market Maker may only aggregate volumes with one of these two, not
both. Specifically, the Exchange proposes to specify in the
definitions section that that ``[w]ith prior notice to the Exchange,
a Member may aggregate ADAV or ADV with other Members that control,
are controlled by, or are under common control with such Member or
who have been appointed as an Appointed OEF or Appointed OEF.'' See
proposed Fee Schedule, ``Definitions'', emphasis added.
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Thus, the proposed changes would enable firms that may not
currently be eligible for tiered pricing incentives to avail themselves
of such incentives as well as to assist firms that are currently
eligible for such incentives to potentially achieve a higher tier, thus
qualifying for higher rebates or reduced fees. The Exchange believes
these proposed changes would incentivize firms to direct their order
flow to the Exchange to the benefit of all market participants.
Further, the Exchange believes that the proposed changes would
encourage Market Maker firms to increase their participation on the
Exchange, which would increase capital commitment and liquidity on the
Exchange to the benefit of all market participants.
As proposed, the Exchange would only process one designation of an
Appointed OEF and Appointed MM per year, which designation would remain
in effect unless or until the parties informed the Exchange of its
termination.\13\ The Exchange believes that this requirement would
impose a measure of exclusivity and would enable both parties to rely
upon each other's transaction volumes executed on the Exchange, and
potentially increase such volumes, which is beneficial to all Exchange
participants.
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\13\ See supra, note 7.
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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.\14\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\15\ 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.
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\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposed fees and rebates are
[[Page 21407]]
reasonable, fair and equitable, and non-discriminatory for the
following reasons. First, the proposal would be available to all Market
Makers and OEFs and the decision to be designated as an ``Appointed
OEF'' or ``Appointed MM'' is completely voluntary and Members may elect
to accept this appointment or not. In addition, the proposed changes
would enable firms that are not currently eligible for tiered pricing
to avail themselves such pricing as well as to assist firms that are
currently eligible for such tiers to potentially achieve a higher tier,
thus qualifying for higher rebates or lower fees. The Exchange believes
these proposed changes would incentivize firms to direct their order
flow to the Exchange. Specifically, the proposed changes would enable
any Market Maker to qualify its Appointed OEF for purposes of tiered
pricing. Moreover, the proposed change would allow any OEF, by virtue
of designating an Appointed MM, to aggregate its own Customer volume
with the activity of its Appointed MM, which would enhance the OEF's
potential to qualify for enhanced rebates or reduced fees. The Exchange
believes these proposed changes would incentivize Appointed OEFs with
an Appointed MM to direct their order flow to the Exchange, which
increase in orders routed to the Exchange would benefit all market
participants by expanding liquidity and providing more trading
opportunities on the Exchange. Similarly, the Exchange believes these
proposed changes would incentivize Appointed MMs with an Appointed OEF
to increase their participation on the Exchange, which would increase
capital commitment and liquidity and decrease spreads on the Exchange
to the benefit of all market participants. The Exchange believes that,
similar to volume based tiers offered by the Exchange, the benefits of
the proposal extend to all market participants based on the increased
quality of liquidity on the Exchange, including those market
participants that opt not to become an Appointed OEF or Appointed MM.
Further, the Exchange believes that the proposal is reasonable and
equitably allocated because it is beneficial to all Exchange
participants based on the fact that it enables parties to rely upon
each other's transaction volumes executed on the Exchange, and
potentially increase such volumes. In turn, as above, the potential
increase in order flow, capital commitment and resulting liquidity on
the Exchange would benefit all market participants by expanding
liquidity, providing more trading opportunities and tighter spreads.
The proposal is also reasonable, equitable and not unfairly
discriminatory because the Exchange would only process one designation
of an Appointed OEF and Appointed MM per year, which requirement would
impose a measure of exclusivity while allowing both parties to rely
upon each other's transaction volumes executed on the Exchange, and
potentially increase such volumes, again, to the benefit of all market
participants. Finally, the Exchange believes the proposal is
reasonable, equitable and not unfairly discriminatory as it may
encourage an increase in orders routed to the Exchange, which would
expand liquidity and provide more trading opportunities and tighter
spreads to the benefit of all market participants, even to those market
participants that are either currently affiliated by virtue of their
common ownership or that opt not to become an Appointed OEF or
Appointed MM under this proposal.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed amendments to its
fee schedule would impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
Exchange believes that the proposed changes are pro-competitive as they
would increase opportunities for firms to qualify for tiered pricing on
the Exchange, which may increase intermarket and intramarket
competition by incenting participants to direct their orders to the
Exchange thereby increasing the volume of contracts traded on the
Exchange and enhancing the quality of quoting. Enhanced market quality
and increased transaction volume that results from the anticipated
increase in order flow directed to the Exchange would benefit all
market participants and improve competition on the Exchange. The
Exchange notes that it operates in a highly competitive market in which
market participants can readily favor competing venues. In such an
environment, the Exchange must continually review, and consider
adjusting, its fees and rebates to remain competitive with other
exchanges. For the reasons described above, the Exchange believes that
the proposed rule change reflects this competitive environment.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
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 \16\ and paragraph (f) of Rule 19b-4
thereunder.\17\ 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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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-BatsEDGX-2016-05 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-BatsEDGX-2016-05. 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
[[Page 21408]]
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-BatsEDGX-2016-05 and should be submitted on or before
May 2, 2016.
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\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08185 Filed 4-8-16; 8:45 am]
BILLING CODE 8011-01-P
