Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc., 62781-62783 [2016-21800]

Download as PDF Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices of 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 either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day after publication of the notice for this proposed rule change is September 16, 2016. The Commission is extending this 45-day 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 proposed rule change. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 designates October 31, 2016, as the date by which the Commission should either approve or disapprove or institute proceedings to determine whether to disapprove the proposed rule change (File Number SR– NYSEArca–2016–101). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–21799 Filed 9–9–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78771; File No. SR– BatsEDGX–2016–49] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc. sradovich on DSK3GMQ082PROD with NOTICES September 6, 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 August 22, 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 5 Id. 6 17 CFR 200.30–3(a)(31). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 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). 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 marketing fee program to institute a monthly cap of $250,000 on undisbursed funds and reimburse excess funds on a pro-rata basis, as further described below. The Exchange assesses a marketing fee to all Market Makers for contracts they execute in their assigned classes when the contra-party to the execution is a Customer.6 The marketing fee is 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 6 The amount of the marketing fee depends upon whether the affected option class is a Penny Pilot Security. A marketing fee of $0.25 per contract is assessed to Market Makers for transactions in Penny 4 17 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 62781 charged only in a Market Maker’s assigned classes because it is in these classes that the Market Maker has the general obligation to attract order flow to the Exchange. Each Primary Market Maker (‘‘PMM’’) 7 and Directed Market Maker (‘‘DMM’’) 8 has a marketing fee pool into which the Exchange will deposit the applicable per-contract marketing fee. For orders directed to DMMs, the applicable marketing fees are allocated to the DMM pool. For nondirected orders, the applicable marketing fees are allocated to the PMM pool. All Market Makers that participated in such transaction will pay the applicable marketing fees to the Exchange, which allocates such funds to the Market Maker that controls the distribution of the marketing fee pool. Each month the Market Maker provides instruction to the Exchange describing how the Exchange is to distribute the marketing fees in the pool to the order flow provider, who submit as agent, Customer orders to the Exchange. The Exchange proposes to now require that the total balance of the undisbursed marketing fees for a PMM pool and DMM pool cannot exceed $250,000. When the pool balance exceeds this threshold level, the Exchange will rebate funds proportionately to those who have paid the marketing fee during the preceding month. Today, undisbursed marketing fees are reimbursed to the Market Makers that contributed to the pool based upon their pro-rata portion of the entire amount of marketing fee collected. As proposed, each month, undisbursed marketing fees in excess of $250,000 will be reimbursed to the Market Makers that contributed to the pool based upon a one month look back and their pro-rata portion of the entire amount of marketing fee collected during that month. The Exchange will closely monitor the levels of the cap to ensure that there are adequate funds available to Market Makers to be competitive. The Exchange believes the proposed cap and reimbursement process would assist Market Makers in better managing their respective marketing fee pools and incentivize them to allocate those funds to order flow providers accordingly on a monthly basis. Pilot Securities. A Marketing Fee of $0.70 per contract is assessed to Market Makers for transactions in Non-Penny Pilot Securities. A list of option classes included in the Penny Pilot Program is available on the Exchange’s Web site. 7 See Exchange Rule 21.8(g). 8 See Exchange Rule 21.8(f). E:\FR\FM\12SEN1.SGM 12SEN1 62782 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of section 6 of the Act.9 Specifically, the Exchange believes that the proposed rule change is consistent with section 6(b)(4) of the Act,10 in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. The Exchange notes that the U.S. options markets are highly competitive, and the marketing fee is intended to provide an incentive for Market Makers to enter into marketing agreements with Members so that they will provide order flow to the Exchange. The marketing fee is charged only in a Market Maker’s assigned classes because it is in these classes that the Market Maker has the general obligation to attract order flow to the Exchange. The Exchange believes that the proposed amendments to its marketing fee program, which is similar to marketing fee programs that have previously been implemented on other options exchanges,11 will enhance the Exchange’s competitive position and will result in increased liquidity on the Exchange, thereby providing more of an opportunity for customers to receive best executions. In addition, the proposed cap and reimbursement process would assist Market Makers in better managing their respective marketing fee pools and incentivize them to allocate those funds to order flow providers accordingly on a monthly basis. The Exchange notes that most options exchange’s that administer a marketing fee program do not cap the monthly contributions,12 thereby 9 15 U.S.C. 78f. U.S.C. 78f(b)(4). 11 See International Securities Exchange, Inc. (‘‘ISE’’) fee schedule available at https:// www.ise.com/assets/documents/OptionsExchange/ legal/fee/ISE_fee_schedule.pdf (implementing a cap of $100,000); ISE Mercury LLC (‘‘ISE Mercury’’) fee schedule available at https://www.ise.com/assets/ mercury/documents/OptionsExchange/legal/fee/ Mercury_Fee_Schedule.pdf (implementing a marketing fee cap of $100,000); and Chicago Board Options Exchange, Incorporated (‘‘CBOE’’) fee schedule available at https://www.cboe.com/framed/ pdfframed.aspx?content=/publish/feeschedule/ CBOEFeeSchedule.pdf&section=SEC_ RESOURCES&title=CBOE%20Fee%20Schedule (implementing a marketing fee cap of $100,000). 12 See e.g., Nasdaq PHLX LLC (‘‘PHLX’’) price list available at https://www.nasdaqtrader.com/ Micro.aspx?id=PHLXPricing; Miami International Securities Exchange LLC (‘‘MIAX’’) available at sradovich on DSK3GMQ082PROD with NOTICES 10 15 VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 allowing their market makers to roll over monies from month to month without making the disbursements provided for by their respective programs. Therefore, the Exchange believes that providing a cap of $250,000 is equitable and reasonable as it would allow the Exchange to monitor the impact of the cap on a Market Maker’s allocation of marketing fees without inappropriately limiting a Market Maker’s ability to carry over funds from month to month. investors, or otherwise in furtherance of the purposes of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition • 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 No. SR– BatsEDGX–2016–49 on the subject line. The Exchange believes its 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. The Exchange does not believe that the proposed change represents a significant departure from previous pricing offered by the Exchange or its competitors. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. The Exchange believes that its proposed marketing fee cap, which is similar to marketing fee caps in place on other options exchanges,13 will enhance the Exchange’s competitive position by resulting in increased liquidity on the Exchange, thereby providing more of an opportunity for customers to receive best executions. 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 14 and paragraph (f) of Rule 19b–4 thereunder.15 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 https://www.miaxoptions.com/sites/default/files/ MIAX_Options_Fee_Schedule_08012016C.pdf. 13 See supra note 10. 14 15 U.S.C. 78s(b)(3)(A). 15 17 CFR 240.19b–4(f). PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments 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 No. SR–BatsEDGX–2016–49. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–BatsEDGX– 2016–49 and should be submitted on or before October 3, 2016. E:\FR\FM\12SEN1.SGM 12SEN1 Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–21800 Filed 9–9–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736 sradovich on DSK3GMQ082PROD with NOTICES Extension: Rule 237, SEC File No. 270–465, OMB Control No. 3235–0528 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 350l–3520), the Securities and Exchange Commission (the ‘‘Commission’’) has submitted to the Office of Management and Budget a request for extension and approval of the collection of information discussed below. In Canada, as in the United States, individuals can invest a portion of their earnings in tax-deferred retirement savings accounts (‘‘Canadian retirement accounts’’). These accounts, which operate in a manner similar to individual retirement accounts in the United States, encourage retirement savings by permitting savings on a taxdeferred basis. Individuals who establish Canadian retirement accounts while living and working in Canada and who later move to the United States (‘‘Canadian-U.S. Participants’’ or ‘‘participants’’) often continue to hold their retirement assets in their Canadian retirement accounts rather than prematurely withdrawing (or ‘‘cashing out’’) those assets, which would result in immediate taxation in Canada. Once in the United States, however, these participants historically have been unable to manage their Canadian retirement account investments. Most securities that are ‘‘qualified investments’’ for Canadian retirement accounts are not registered under the U.S. securities laws. Those securities, therefore, generally cannot be publicly offered and sold in the United States without violating the registration requirement of the Securities Act of 1933 (‘‘Securities Act’’).1 As a result of 16 17 CFR 200.30–3(a)(12). U.S.C. 77. In addition, the offering and selling of securities of investment companies 1 15 VerDate Sep<11>2014 18:40 Sep 09, 2016 Jkt 238001 this registration requirement, CanadianU.S. Participants previously were not able to purchase or exchange securities for their Canadian retirement accounts as needed to meet their changing investment goals or income needs. The Commission issued a rulemaking in 2000 that enabled Canadian-U.S. Participants to manage the assets in their Canadian retirement accounts by providing relief from the U.S. registration requirements for offers of securities of foreign issuers to CanadianU.S. Participants and sales to Canadian retirement accounts.2 Rule 237 under the Securities Act 3 permits securities of foreign issuers, including securities of foreign funds, to be offered to CanadianU.S. Participants and sold to their Canadian retirement accounts without being registered under the Securities Act. Rule 237 requires written offering documents for securities offered and sold in reliance on the rule to disclose prominently that the securities are not registered with the Commission and are exempt from registration under the U.S. securities laws. The burden under the rule associated with adding this disclosure to written offering documents is minimal and is non-recurring. The foreign issuer, underwriter, or brokerdealer can redraft an existing prospectus or other written offering material to add this disclosure statement, or may draft a sticker or supplement containing this disclosure to be added to existing offering materials. In either case, based on discussions with representatives of the Canadian fund industry, the staff estimates that it would take an average of 10 minutes per document to draft the requisite disclosure statement. The Commission understands that there are approximately 3,619 Canadian issuers other than funds that may rely on rule 237 to make an initial public offering of their securities to CanadianU.S. Participants.4 The staff estimates (‘‘funds’’) that are not registered pursuant to the Investment Company Act of 1940 (‘‘Investment Company Act’’) is generally prohibited by U.S. securities laws. 15 U.S.C. 80a. 2 See Offer and Sale of Securities to Canadian Tax-Deferred Retirement Savings Accounts, Release Nos. 33–7860, 34–42905, IC–24491 (June 7, 2000) [65 FR 37672 (June 15, 2000)]. This rulemaking also included new rule 7d–2 under the Investment Company Act, permitting foreign funds to offer securities to Canadian-U.S. Participants and sell securities to Canadian retirement accounts without registering as investment companies under the Investment Company Act. 17 CFR 270.7d–2. 3 17 CFR 230.237. 4 This estimate is based on the following calculation: 3,520 equity issuers (as of April 2016) + 99 bond issuers (as of April 2016) = 3,619 total issuers (as of April 2016). See World Federation of Exchanges, Monthly Reports, available at https:// www.world-exchanges.org/home/index.php/ PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 62783 that in any given year approximately 36 (or 1 percent) of those issuers are likely to rely on rule 237 to make a public offering of their securities to participants, and that each of those 36 issuers, on average, distributes 3 different written offering documents concerning those securities, for a total of 108 offering documents. The staff therefore estimates that during each year that rule 237 is in effect, approximately 36 respondents 5 would be required to make 108 responses by adding the new disclosure statements to approximately 108 written offering documents. Thus, the staff estimates that the total annual burden associated with the rule 237 disclosure requirement would be approximately 18 hours (108 offering documents × 10 minutes per document). The total annual cost of burden hours is estimated to be $6,840 (18 hours × $380 per hour of attorney time).6 In addition, issuers from foreign countries other than Canada could rely on rule 237 to offer securities to Canadian-U.S. Participants and sell securities to their accounts without becoming subject to the registration requirements of the Securities Act. However, the staff believes that the number of issuers from other countries that rely on rule 237, and that therefore are required to comply with the offering document disclosure requirements, is negligible. These burden hour estimates are based upon the Commission staff’s experience and discussions with the fund industry. The estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act. These estimates are not derived statistics/monthly-reports (providing number of equity issuers listed on Canada’s Toronto Stock Exchange). After 2009, the World Federation of Exchanges ceased reporting the number of fixedincome issuers on Canada’s Toronto Stock Exchange. The number of fixed-income issuers as of April 2016 is based on the ratio of the number of fixed-income issuers listed on Canada’s Toronto Stock Exchange in 2009 (111) relative to the number of bonds listed on that exchange in that year (178) multiplied against the number of bonds listed on that exchange as of April 2016 (159): (111/178) × 159 = 99. 5 This estimate of respondents only includes foreign issuers. The number of respondents would be greater if foreign underwriters or broker-dealers draft stickers or supplements to add the required disclosure to existing offering documents. 6 The Commission’s estimate concerning the wage rate for attorney time is based on salary information for the securities industry compiled by the Securities Industry and Financial Markets Association (‘‘SIFMA’’). The $380 per hour figure for an attorney is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead. E:\FR\FM\12SEN1.SGM 12SEN1

Agencies

[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)]
[Notices]
[Pages 62781-62783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21800]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78771; File No. SR-BatsEDGX-2016-49]


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

September 6, 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 August 22, 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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    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 marketing fee program to 
institute a monthly cap of $250,000 on undisbursed funds and reimburse 
excess funds on a pro-rata basis, as further described below.
    The Exchange assesses a marketing fee to all Market Makers for 
contracts they execute in their assigned classes when the contra-party 
to the execution is a Customer.\6\ The marketing fee is charged only in 
a Market Maker's assigned classes because it is in these classes that 
the Market Maker has the general obligation to attract order flow to 
the Exchange. Each Primary Market Maker (``PMM'') \7\ and Directed 
Market Maker (``DMM'') \8\ has a marketing fee pool into which the 
Exchange will deposit the applicable per-contract marketing fee. For 
orders directed to DMMs, the applicable marketing fees are allocated to 
the DMM pool. For non-directed orders, the applicable marketing fees 
are allocated to the PMM pool. All Market Makers that participated in 
such transaction will pay the applicable marketing fees to the 
Exchange, which allocates such funds to the Market Maker that controls 
the distribution of the marketing fee pool. Each month the Market Maker 
provides instruction to the Exchange describing how the Exchange is to 
distribute the marketing fees in the pool to the order flow provider, 
who submit as agent, Customer orders to the Exchange.
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    \6\ The amount of the marketing fee depends upon whether the 
affected option class is a Penny Pilot Security. A marketing fee of 
$0.25 per contract is assessed to Market Makers for transactions in 
Penny Pilot Securities. A Marketing Fee of $0.70 per contract is 
assessed to Market Makers for transactions in Non-Penny Pilot 
Securities. A list of option classes included in the Penny Pilot 
Program is available on the Exchange's Web site.
    \7\ See Exchange Rule 21.8(g).
    \8\ See Exchange Rule 21.8(f).
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    The Exchange proposes to now require that the total balance of the 
undisbursed marketing fees for a PMM pool and DMM pool cannot exceed 
$250,000. When the pool balance exceeds this threshold level, the 
Exchange will rebate funds proportionately to those who have paid the 
marketing fee during the preceding month. Today, undisbursed marketing 
fees are reimbursed to the Market Makers that contributed to the pool 
based upon their pro-rata portion of the entire amount of marketing fee 
collected. As proposed, each month, undisbursed marketing fees in 
excess of $250,000 will be reimbursed to the Market Makers that 
contributed to the pool based upon a one month look back and their pro-
rata portion of the entire amount of marketing fee collected during 
that month. The Exchange will closely monitor the levels of the cap to 
ensure that there are adequate funds available to Market Makers to be 
competitive. The Exchange believes the proposed cap and reimbursement 
process would assist Market Makers in better managing their respective 
marketing fee pools and incentivize them to allocate those funds to 
order flow providers accordingly on a monthly basis.

[[Page 62782]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of section 6 of the Act.\9\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with section 6(b)(4) of the Act,\10\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and other persons using any facility or system which the 
Exchange operates or controls.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange notes that the U.S. options markets are highly 
competitive, and the marketing fee is intended to provide an incentive 
for Market Makers to enter into marketing agreements with Members so 
that they will provide order flow to the Exchange. The marketing fee is 
charged only in a Market Maker's assigned classes because it is in 
these classes that the Market Maker has the general obligation to 
attract order flow to the Exchange.
    The Exchange believes that the proposed amendments to its marketing 
fee program, which is similar to marketing fee programs that have 
previously been implemented on other options exchanges,\11\ will 
enhance the Exchange's competitive position and will result in 
increased liquidity on the Exchange, thereby providing more of an 
opportunity for customers to receive best executions. In addition, the 
proposed cap and reimbursement process would assist Market Makers in 
better managing their respective marketing fee pools and incentivize 
them to allocate those funds to order flow providers accordingly on a 
monthly basis. The Exchange notes that most options exchange's that 
administer a marketing fee program do not cap the monthly 
contributions,\12\ thereby allowing their market makers to roll over 
monies from month to month without making the disbursements provided 
for by their respective programs. Therefore, the Exchange believes that 
providing a cap of $250,000 is equitable and reasonable as it would 
allow the Exchange to monitor the impact of the cap on a Market Maker's 
allocation of marketing fees without inappropriately limiting a Market 
Maker's ability to carry over funds from month to month.
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    \11\ See International Securities Exchange, Inc. (``ISE'') fee 
schedule available at https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf (implementing a cap 
of $100,000); ISE Mercury LLC (``ISE Mercury'') fee schedule 
available at https://www.ise.com/assets/mercury/documents/OptionsExchange/legal/fee/Mercury_Fee_Schedule.pdf (implementing a 
marketing fee cap of $100,000); and Chicago Board Options Exchange, 
Incorporated (``CBOE'') fee schedule available at https://www.cboe.com/framed/pdfframed.aspx?content=/publish/feeschedule/CBOEFeeSchedule.pdf§ion=SEC_RESOURCES&title=CBOE%20Fee%20Schedule
 (implementing a marketing fee cap of $100,000).
    \12\ See e.g., Nasdaq PHLX LLC (``PHLX'') price list available 
at https://www.nasdaqtrader.com/Micro.aspx?id=PHLXPricing; Miami 
International Securities Exchange LLC (``MIAX'') available at https://www.miaxoptions.com/sites/default/files/MIAX_Options_Fee_Schedule_08012016C.pdf.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its 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. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or its 
competitors. Additionally, Members may opt to disfavor the Exchange's 
pricing if they believe that alternatives offer them better value. The 
Exchange believes that its proposed marketing fee cap, which is similar 
to marketing fee caps in place on other options exchanges,\13\ will 
enhance the Exchange's competitive position by resulting in increased 
liquidity on the Exchange, thereby providing more of an opportunity for 
customers to receive best executions.
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    \13\ See supra note 10.
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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 \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 proposal 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 No. SR-BatsEDGX-2016-49 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 No. SR-BatsEDGX-2016-49. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsEDGX-2016-49 and should be 
submitted on or before October 3, 2016.


[[Page 62783]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-21800 Filed 9-9-16; 8:45 am]
BILLING CODE 8011-01-P
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