Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Fee Schedule Applicable to the Exchange's Options Platform, 23533-23536 [2016-09204]

Download as PDF Federal Register / Vol. 81, No. 77 / Thursday, April 21, 2016 / Notices will promote the prompt and accurate clearance and settlement of securities transactions, derivatives agreements, contracts, and transactions. ICC’s Stress Testing Framework describes ICC’s stress testing practices, which are designed to ensure the adequacy of systemic risk protections. The Stress Testing Framework sets forth the methodology by which ICC evaluates potential portfolio profits/losses, compared to the Initial Margin and Guaranty Fund funds maintained, in order to identify any potential weakness in the risk methodology. As such, the proposed rule changes are designed to promote the prompt and accurate clearance and settlement of securities transactions, derivatives agreements, contracts, and transactions within the meaning of Section 17A(b)(3)(F) 5 of the Act. The proposed changes will also satisfy the requirements of Rule 17Ad– 22.6 In particular, the Stress Testing Framework contains stress testing practices designed to ensure that ICE Clear Credit maintains sufficient financial resources to withstand a default by the CP family to which it has the largest exposure in extreme but plausible market conditions, and that as a registered clearing agency acting as a central counterparty for security-based swaps, ICC shall maintain additional financial resources sufficient to withstand, at a minimum, a default by the two CP families to which it has the largest exposures in extreme but plausible market conditions,7 consistent with the requirements of Rule 17Ad– 22(b)(3).8 B. Self-Regulatory Organization’s Statement on Burden on Competition ICC does not believe the proposed rule changes would have any impact, or impose any burden, on competition. To the extent the Stress Testing Framework impacts CPs, the Stress Testing Framework applies uniformly across all CPs. Therefore, ICC does not believe the proposed rule changes impose any burden on competition that is inappropriate in furtherance of the purposes of the Act. 5 Id. jstallworth on DSK7TPTVN1PROD with NOTICES 6 17 CFR 240.17Ad–22. to confirmation via email with ICC on April 13, 2016, staff in the Division of Trading and Markets modified this sentence to add the reference to ICC maintaining sufficient financial resources to withstand, at a minimum, the default by the two CP families to which it has the largest exposures in extreme but plausible market conditions to conform to the requirements of Rule 17Ad–22(b)(3). 8 17 CFR 240.17Ad–22(b)(3). 7 Pursuant VerDate Sep<11>2014 13:27 Apr 20, 2016 Jkt 238001 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule change have not been solicited or received. ICC will notify the Commission of any written comments received by ICC. 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 (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization 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: 23533 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 filings will also be available for inspection and copying at the principal office of ICE Clear Credit and on ICE Clear Credit’s Web site at https:// www.theice.com/clear-credit/regulation. 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–ICC–2016–005 and should be submitted on or before May 12, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Brent J. Fields, Secretary. [FR Doc. 2016–09205 Filed 4–20–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–77632; File No. SR– BatsBZX–2016–06] • 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– ICC–2016–005 on the subject line. Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Fee Schedule Applicable to the Exchange’s Options Platform Paper Comments April 15, 2016. 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–ICC–2016–005. 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 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 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 April 7, 2016, Bats BZX 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) 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 1 15 E:\FR\FM\21APN1.SGM 21APN1 23534 Federal Register / Vol. 81, No. 77 / Thursday, April 21, 2016 / Notices 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 jstallworth on DSK7TPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to modify its fee schedule applicable to the Exchange’s options platform (‘‘BZX Options’’) to: (i) Replace references to ‘‘NBMM’’ (i.e., Non-Bats Market Maker) with the term ‘‘Away MM’’ (i.e., Away Market Maker); (ii) adopt a new Quoting Incentive Program Tier under footnote 5; (iii) amend the criteria necessary to meet the Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 under footnote 2; and (iv) amend the criteria necessary to meet the Away Market Maker Penny Pilot Add Volume Tier 2 under footnote 10. Replace References to ‘‘NBMM’’ With ‘‘Away MM’’ In February 2016, the Exchange amended its fee schedule to rename the 4 17 CFR 240.19b–4(f)(2). 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). 5 The VerDate Sep<11>2014 13:27 Apr 20, 2016 Jkt 238001 defined term ‘‘Non-BATS Market Maker’’ as ‘‘Away Market Maker’’ to be consistent with terminology used on the options fee schedule of the Exchange’s affiliate, Bats EDGX Exchange, Inc.6 In light of that change, the Exchange now proposes to replace references to ‘‘NBMM’’ (i.e., Non-Bats Market Maker) with the term ‘‘Away MM’’ (i.e. Away Market Maker) under footnotes 2, 4, 8 and 10 in order to use consistent terminology through the fee schedule. With this change, the Exchange does not propose to amend the criteria necessary to meet the tier or the amount of the rebate provided. Quoting Incentive Program (‘‘QIP’’) Tier 3 The Exchange currently offers two QIP tiers which provide an additional rebate per contract for an order that adds liquidity to the BZX Options Book 7 in options classes in which a Member is a Market Maker registered on BZX Options pursuant to Rule 22.2. The Market Maker must be registered with BZX Options in an average of 20% or more of the associated options series in a class in order to qualify for QIP rebates for that class. Under QIP Tier 1, a Market Maker will receive an additional rebate of $0.02 per contract where that Market Maker has an ADV 8 equal to or greater than 0.30% of average TCV.9 Under QIP Tier 2, a Market Maker will receive an additional rebate of $0.04 per contract where that Market Maker has an ADV equal to or greater than 1.00% of average TCV. The Exchange now proposes to add QIP Tier 3 under which a Market Maker may receive an additional rebate of $0.06 per contract where the Member has an ADV equal to or greater than 2.5% of average TCV. Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 The Exchange proposes to amend the criteria necessary to meet and receive the rebate associated with the Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 under footnote 2, which currently provides Members with a rebate of $0.46 per contract for Firm,10 Broker Dealer,11 and Joint Back Office 12 orders that add liquidity in Penny Pilot Securities 13 where the Member has an: (i) ADAV 14 in Firm, Broker-Dealer, or Joint Back Office orders in Penny Pilot Securities (yielding Fee Code PF) 15 equal to or greater than 0.25% of average TCV; and (ii) ADV equal to or greater than 1.50% of average TCV. Specifically, the Exchange proposes to amend the Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 to now require that the Member have an ADAV in Away Market Maker 16 orders, in addition to Firm, Broker-Dealer, or Joint Back Office orders equal to or greater than 0.80%, rather than 0.25%, of average TCV. While the rebate would continue to be available only to Firm, Broker-Dealer, or Joint Back Office orders in Penny Pilot Securities, the requirement that the Member have an ADAV equal to or greater than 0.80% of average TCV would no longer be limited to orders in Penny Pilot Securities. The tier would continue to require that Members also have an ADV equal to or greater than 1.50% of average TCV. Away Market Maker Penny Pilot Add Volume Tier 2 The Exchange proposes to amend the criteria necessary to meet and receive the rebate associated with the Away Market Maker Penny Pilot Add Volume Tier 2 under footnote 10, which currently provides a Member that acts as an Away Market Maker a rebate of $0.46 per contract for Away Market Maker orders that add liquidity in a Penny Pilot Security where the Member has an: (i) ADAV in Firm, Broker-Dealer, and/or Joint Back Office orders in Penny Pilot Securities (yielding Fee Code PF) equal to or greater than 0.25% of average TCV; and (ii) ADV equal to or greater than 1.50% of average TCV. Specifically, the Exchange proposes to amend the Away Market Maker Penny Pilot Add Volume Tier 2 to now require that the Member have an ADAV in Away Market Maker 17 orders, in addition to Firm, BrokerDealer, or Joint Back Office orders equal to or greater than 0.80%, rather than 0.25%, of average TCV. While the rebate would continue to be available only to 12 Id. 6 See Securities Exchange Act Release No. 77307 (March 7, 2016), 81 FR 12996 (March 11, 2016) (Notice of Filing and Immediate Effectiveness of SR–BATS–2016–25). 7 See Exchange Rule 16.1(a)(9). 8 As defined in the Exchange’s fee schedule available at https://www.batsoptions.com/support/ fee_schedule/bzx/. 9 Id. 10 Id. 11 As defined in the Exchange’s fee schedule available at https://www.batsoptions.com/support/ fee_schedule/bzx/. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 13 Id. 14 Id. 15 Fee code PF is yielding to Firm, Broker-Dealer, and Joint Back Office orders that add liquidity in Penny Pilot Securities. See the Exchange’s fee schedule available at https://www.batsoptions.com/ support/fee_schedule/bzx/. 16 As defined in the Exchange’s fee schedule available at https://www.batsoptions.com/support/ fee_schedule/bzx/. 17 As defined in the Exchange’s fee schedule available at https://www.batsoptions.com/support/ fee_schedule/bzx/. E:\FR\FM\21APN1.SGM 21APN1 Federal Register / Vol. 81, No. 77 / Thursday, April 21, 2016 / Notices Firm, Broker-Dealer, or Joint Back Office orders in Penny Pilot Securities, the requirement that the Member have an ADAV equal to or greater than 0.80% of average TCV would no longer be limited to orders in Penny Pilot Securities. The Exchange notes that this change is similar to that proposed for the Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 discussed above. The tier would continue to require that Members also have an ADV equal to or greater than 1.50% of average TCV. jstallworth on DSK7TPTVN1PROD with NOTICES Implementation Date The Exchange proposes to implement these amendments to its fee schedule immediately.18 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.19 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,20 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. Specifically, the Exchange believes the changes to the Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 and Away Market Maker Penny Pilot Add Volume Tier 2 are reasonable, fair and equitable and nondiscriminatory, for the reasons set forth 18 The Exchange initially filed the proposed change on April 1, 2016 (SR–BatsBZX–2016–05). On April 7, 2016, the Exchange withdrew SR– BatsBZX–2016–05 and submitted this filing. 19 15 U.S.C. 78f. 20 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 13:27 Apr 20, 2016 Jkt 238001 23535 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 changes will provide Members with an increased incentive to add liquidity in Away Market Maker orders, which the Exchange not only believes will enhance market quality for all market participants, but will also encourage increased participation of other orders wanting to interact with such Away Market Maker orders, further to the benefit of all market participants. The Exchange also believes that the proposed changes to the tiers 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. The Exchange believes that its proposal to add a new QIP Tier 3 under footnote 5 is reasonable, fair and equitable and non-discriminatory, for the reasons set forth above with respect to volume-based pricing generally. In addition, the Exchange believes the amount of the proposed rebate offered under QIP Tier 3 is equitable and reasonable because of the increased criteria required to satisfy QIP Tier 3 compared to the rebates offered and the criteria required by QIP Tiers 1 and 2. The Exchange also notes that although registration as a Market Maker is required to qualify for QIP, such registration is available to all Members on an equal basis. The Exchange also believes that the proposed tier is reasonable, fair and equitable, and nondiscriminatory because it, like the QIP generally, is aimed to incentivize active market making on the Exchange. Lastly, the Exchange believes that replacing references to ‘‘NBMM’’ with ‘‘Away MM’’ is reasonable, fair and equitable and non-discriminatory because it is non-substantive designed to make the fee schedule as clear and easily understandable as possible. The proposed changes would enable the Exchange to use consistent terminology throughout the fee schedule. With this change, the Exchange does not propose to amend the criteria necessary to meet the tier or the amount of the rebate provided. 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 to further the growth of the Exchange. Also, the Exchange believes that the increase to certain thresholds necessary to meet tiers offered by the Exchange contributes to rather than burdens competition, as such changes are intended to incentivize participants to increase their participation on the Exchange. Similarly, the introduction of a new QIP Tier is intended to provide incentives to Market Makers to encourage them to enter orders to the Exchange, and thus is again intended to enhance competition. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. 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. (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 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 (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. The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) E:\FR\FM\21APN1.SGM 21APN1 23536 Federal Register / Vol. 81, No. 77 / Thursday, April 21, 2016 / Notices of the Act 21 and paragraph (f) of Rule 19b–4 thereunder.22 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: jstallworth on DSK7TPTVN1PROD 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– BatsBZX–2016–06 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–BatsBZX–2016–06. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from 21 15 U.S.C. 78s(b)(3)(A). 22 17 CFR 240.19b–4(f). VerDate Sep<11>2014 13:27 Apr 20, 2016 Jkt 238001 submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– BatsBZX–2016–06 and should be submitted on or before May 12, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Brent J. Fields, Secretary. [FR Doc. 2016–09204 Filed 4–20–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77635; File No. SR–FINRA– 2016–010] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Designation of Longer Period for Commission Action on a Proposed Rule Change To Adopt FINRA Rule 4554 (Alternative Trading Systems—Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) April 15, 2016. On February 29, 2016, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to require alternative trading systems (‘‘ATSs’’) to submit additional order information to FINRA. The proposed rule change was published for comment in the Federal Register on March 7, 2016.3 The Commission received one comment letter on the proposal.4 Section 19(b)(2) of the Act 5 provides that, within 45 days of the publication of the notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall approve the proposed rule change, disapprove the proposed rule change, or institute 23 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 77269 (March 1, 2016), 81 FR 11851 (March 7, 2016). 4 See Letter to the Secretary from Theodore R. Lazo, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated April 1, 2016 (‘‘SIFMA Letter’’). 5 15 U.S.C. 78s(b)(2). 1 15 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is April 21, 2016. The Commission is extending this 45day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the comment received on the proposal. Accordingly, pursuant to Section 19(b)(2) of the Act,6 the Commission designates June 3, 2016, as the date by which the Commission should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change (File No. SR FINRA–2016–010). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Brent J. Fields, Secretary. [FR Doc. 2016–09207 Filed 4–20–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77628; File No. SR–OCC– 2016–801] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of an Advance Notice Related to the Adoption of an Options Exchange Risk Control Standards Policy April 15, 2016. Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, entitled the Payment, Clearing, and Settlement Supervision Act of 2010 1 (‘‘Payment, Clearing and Settlement Supervision Act’’) and Rule 19b– 4(n)(1)(i) under the Securities Exchange Act of 1934,2 notice is hereby given that on March 4, 2016, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the advance notice as described in Items I and II below, which Items have been prepared by OCC. The Commission is publishing this notice to solicit comments on the advance notice from interested persons. 6 Id. 7 17 CFR 200.30–3(a)(31). U.S.C. 5465(e)(1). 2 17 CFR 240.19b–4(n)(1)(i). 1 12 E:\FR\FM\21APN1.SGM 21APN1

Agencies

[Federal Register Volume 81, Number 77 (Thursday, April 21, 2016)]
[Notices]
[Pages 23533-23536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09204]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77632; File No. SR-BatsBZX-2016-06]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the Fee Schedule Applicable to the Exchange's Options Platform

 April 15, 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 April 7, 2016, Bats BZX 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)

[[Page 23534]]

thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to BZX Rules 
15.1(a) and (c).
---------------------------------------------------------------------------

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

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

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

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

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

1. Purpose
    The Exchange proposes to modify its fee schedule applicable to the 
Exchange's options platform (``BZX Options'') to: (i) Replace 
references to ``NBMM'' (i.e., Non-Bats Market Maker) with the term 
``Away MM'' (i.e., Away Market Maker); (ii) adopt a new Quoting 
Incentive Program Tier under footnote 5; (iii) amend the criteria 
necessary to meet the Firm, Broker Dealer, and Joint Back Office Penny 
Pilot Add Volume Tier 3 under footnote 2; and (iv) amend the criteria 
necessary to meet the Away Market Maker Penny Pilot Add Volume Tier 2 
under footnote 10.
Replace References to ``NBMM'' With ``Away MM''
    In February 2016, the Exchange amended its fee schedule to rename 
the defined term ``Non-BATS Market Maker'' as ``Away Market Maker'' to 
be consistent with terminology used on the options fee schedule of the 
Exchange's affiliate, Bats EDGX Exchange, Inc.\6\ In light of that 
change, the Exchange now proposes to replace references to ``NBMM'' 
(i.e., Non-Bats Market Maker) with the term ``Away MM'' (i.e. Away 
Market Maker) under footnotes 2, 4, 8 and 10 in order to use consistent 
terminology through the fee schedule. With this change, the Exchange 
does not propose to amend the criteria necessary to meet the tier or 
the amount of the rebate provided.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 77307 (March 7, 
2016), 81 FR 12996 (March 11, 2016) (Notice of Filing and Immediate 
Effectiveness of SR-BATS-2016-25).
---------------------------------------------------------------------------

Quoting Incentive Program (``QIP'') Tier 3
    The Exchange currently offers two QIP tiers which provide an 
additional rebate per contract for an order that adds liquidity to the 
BZX Options Book \7\ in options classes in which a Member is a Market 
Maker registered on BZX Options pursuant to Rule 22.2. The Market Maker 
must be registered with BZX Options in an average of 20% or more of the 
associated options series in a class in order to qualify for QIP 
rebates for that class. Under QIP Tier 1, a Market Maker will receive 
an additional rebate of $0.02 per contract where that Market Maker has 
an ADV \8\ equal to or greater than 0.30% of average TCV.\9\ Under QIP 
Tier 2, a Market Maker will receive an additional rebate of $0.04 per 
contract where that Market Maker has an ADV equal to or greater than 
1.00% of average TCV. The Exchange now proposes to add QIP Tier 3 under 
which a Market Maker may receive an additional rebate of $0.06 per 
contract where the Member has an ADV equal to or greater than 2.5% of 
average TCV.
---------------------------------------------------------------------------

    \7\ See Exchange Rule 16.1(a)(9).
    \8\ As defined in the Exchange's fee schedule available at 
https://www.batsoptions.com/support/fee_schedule/bzx/.
    \9\ Id.
---------------------------------------------------------------------------

Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 
3
    The Exchange proposes to amend the criteria necessary to meet and 
receive the rebate associated with the Firm, Broker Dealer, and Joint 
Back Office Penny Pilot Add Volume Tier 3 under footnote 2, which 
currently provides Members with a rebate of $0.46 per contract for 
Firm,\10\ Broker Dealer,\11\ and Joint Back Office \12\ orders that add 
liquidity in Penny Pilot Securities \13\ where the Member has an: (i) 
ADAV \14\ in Firm, Broker-Dealer, or Joint Back Office orders in Penny 
Pilot Securities (yielding Fee Code PF) \15\ equal to or greater than 
0.25% of average TCV; and (ii) ADV equal to or greater than 1.50% of 
average TCV. Specifically, the Exchange proposes to amend the Firm, 
Broker Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 to 
now require that the Member have an ADAV in Away Market Maker \16\ 
orders, in addition to Firm, Broker-Dealer, or Joint Back Office orders 
equal to or greater than 0.80%, rather than 0.25%, of average TCV. 
While the rebate would continue to be available only to Firm, Broker-
Dealer, or Joint Back Office orders in Penny Pilot Securities, the 
requirement that the Member have an ADAV equal to or greater than 0.80% 
of average TCV would no longer be limited to orders in Penny Pilot 
Securities. The tier would continue to require that Members also have 
an ADV equal to or greater than 1.50% of average TCV.
---------------------------------------------------------------------------

    \10\ Id.
    \11\ As defined in the Exchange's fee schedule available at 
https://www.batsoptions.com/support/fee_schedule/bzx/.
    \12\ Id.
    \13\ Id.
    \14\ Id.
    \15\ Fee code PF is yielding to Firm, Broker-Dealer, and Joint 
Back Office orders that add liquidity in Penny Pilot Securities. See 
the Exchange's fee schedule available at https://www.batsoptions.com/support/fee_schedule/bzx/.
    \16\ As defined in the Exchange's fee schedule available at 
https://www.batsoptions.com/support/fee_schedule/bzx/.
---------------------------------------------------------------------------

Away Market Maker Penny Pilot Add Volume Tier 2
    The Exchange proposes to amend the criteria necessary to meet and 
receive the rebate associated with the Away Market Maker Penny Pilot 
Add Volume Tier 2 under footnote 10, which currently provides a Member 
that acts as an Away Market Maker a rebate of $0.46 per contract for 
Away Market Maker orders that add liquidity in a Penny Pilot Security 
where the Member has an: (i) ADAV in Firm, Broker-Dealer, and/or Joint 
Back Office orders in Penny Pilot Securities (yielding Fee Code PF) 
equal to or greater than 0.25% of average TCV; and (ii) ADV equal to or 
greater than 1.50% of average TCV. Specifically, the Exchange proposes 
to amend the Away Market Maker Penny Pilot Add Volume Tier 2 to now 
require that the Member have an ADAV in Away Market Maker \17\ orders, 
in addition to Firm, Broker-Dealer, or Joint Back Office orders equal 
to or greater than 0.80%, rather than 0.25%, of average TCV. While the 
rebate would continue to be available only to

[[Page 23535]]

Firm, Broker-Dealer, or Joint Back Office orders in Penny Pilot 
Securities, the requirement that the Member have an ADAV equal to or 
greater than 0.80% of average TCV would no longer be limited to orders 
in Penny Pilot Securities. The Exchange notes that this change is 
similar to that proposed for the Firm, Broker Dealer, and Joint Back 
Office Penny Pilot Add Volume Tier 3 discussed above. The tier would 
continue to require that Members also have an ADV equal to or greater 
than 1.50% of average TCV.
---------------------------------------------------------------------------

    \17\ As defined in the Exchange's fee schedule available at 
https://www.batsoptions.com/support/fee_schedule/bzx/.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule immediately.\18\
---------------------------------------------------------------------------

    \18\ The Exchange initially filed the proposed change on April 
1, 2016 (SR-BatsBZX-2016-05). On April 7, 2016, the Exchange 
withdrew SR-BatsBZX-2016-05 and submitted this filing.
---------------------------------------------------------------------------

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.\19\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\20\ 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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    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.
    Specifically, the Exchange believes the changes to the Firm, Broker 
Dealer, and Joint Back Office Penny Pilot Add Volume Tier 3 and Away 
Market Maker Penny Pilot Add Volume Tier 2 are 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 changes will provide Members 
with an increased incentive to add liquidity in Away Market Maker 
orders, which the Exchange not only believes will enhance market 
quality for all market participants, but will also encourage increased 
participation of other orders wanting to interact with such Away Market 
Maker orders, further to the benefit of all market participants. The 
Exchange also believes that the proposed changes to the tiers 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.
    The Exchange believes that its proposal to add a new QIP Tier 3 
under footnote 5 is reasonable, fair and equitable and non-
discriminatory, for the reasons set forth above with respect to volume-
based pricing generally. In addition, the Exchange believes the amount 
of the proposed rebate offered under QIP Tier 3 is equitable and 
reasonable because of the increased criteria required to satisfy QIP 
Tier 3 compared to the rebates offered and the criteria required by QIP 
Tiers 1 and 2. The Exchange also notes that although registration as a 
Market Maker is required to qualify for QIP, such registration is 
available to all Members on an equal basis. The Exchange also believes 
that the proposed tier is reasonable, fair and equitable, and non-
discriminatory because it, like the QIP generally, is aimed to 
incentivize active market making on the Exchange.
    Lastly, the Exchange believes that replacing references to ``NBMM'' 
with ``Away MM'' is reasonable, fair and equitable and non-
discriminatory because it is non-substantive designed to make the fee 
schedule as clear and easily understandable as possible. The proposed 
changes would enable the Exchange to use consistent terminology 
throughout the fee schedule. With this change, the Exchange does not 
propose to amend the criteria necessary to meet the tier or the amount 
of the rebate provided.

(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 to further the growth of the Exchange. Also, the Exchange 
believes that the increase to certain thresholds necessary to meet 
tiers offered by the Exchange contributes to rather than burdens 
competition, as such changes are intended to incentivize participants 
to increase their participation on the Exchange. Similarly, the 
introduction of a new QIP Tier is intended to provide incentives to 
Market Makers to encourage them to enter orders to the Exchange, and 
thus is again intended to enhance competition.
    Additionally, Members may opt to disfavor the Exchange's pricing if 
they believe that alternatives offer them better value. Accordingly, 
the Exchange does not believe that the proposed change will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets. 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)

[[Page 23536]]

of the Act \21\ and paragraph (f) of Rule 19b-4 thereunder.\22\ 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.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BatsBZX-2016-06 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-BatsBZX-2016-06. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of 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-BatsBZX-2016-06 and should 
be submitted on or before May 12, 2016.
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Brent J. Fields,
Secretary.
[FR Doc. 2016-09204 Filed 4-20-16; 8:45 am]
 BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.