Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change to Bats BZX Rule 14.13, Company Listing Fees, and to the Bats BZX Fee Schedule; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change, 72624-72629 [2016-25350]
Download as PDF
<![CDATA[
72624
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
promote the productivity of marine
resources, sustain healthy ecosystems,
and promote the prosperity and security
of the Nation’s ocean and coastal
communities and their economies for
the benefit of present and future
generations. The NOC will review the
NE Ocean Plan for consistency with the
National Ocean Policy, Final
Recommendations of the Interagency
Ocean Policy Task Force, and the
Marine Planning Handbook and make
its determination no sooner than 30
days from the publication of this Notice.
Authority: Executive Order 13547,
‘‘Stewardship of the Ocean, Our Coasts and
the Great Lakes’’ (July 19, 2010).
Ted Wackler,
Deputy Chief of Staff and Assistant Director.
[FR Doc. 2016–25372 Filed 10–19–16; 8:45 am]
BILLING CODE 3270–F7–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79103; File No. SRBatsBZX–2016–60]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing of
a Proposed Rule Change to Bats BZX
Rule 14.13, Company Listing Fees, and
to the Bats BZX Fee Schedule;
Suspension of and Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove the Proposed
Rule Change
October 14, 2016.
mstockstill on DSK3G9T082PROD with NOTICES
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
September 29, 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 and II 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 and is, pursuant to Section
19(b)(3)(C) of the Act, hereby: (1)
Temporarily suspending the proposed
rule change; and (2) instituting
proceedings to determine whether to
approve or disapprove the proposal.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend the fees applicable to securities
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
listed on the Exchange, which are set
forth in BZX Rule 14.13 as well as to
amend the fee schedule applicable to
Members 3 and non-Members of the
Exchange pursuant to Exchange Rules
15.1(a) and (c). Changes to the
Exchange’s fees pursuant to this
proposal are effective upon filing.
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
On August 30, 2011, the Exchange
received approval of rules applicable to
the qualification, listing, and delisting
of companies on the Exchange,4 which
it modified on February 8, 2012 in order
to adopt pricing for the listing of
exchange traded products (‘‘ETPs’’) 5 on
the Exchange,6 which it subsequently
modified again on June 4, 2014.7 On
October 16, 2014, the Exchange
modified Rule 14.13, entitled ‘‘Company
Listing Fees’’ to eliminate the annual
fees for ETPs not participating in the
Exchange’s Competitive Liquidity
Provider Program pursuant to Rule 11.8,
Interpretation and Policy .02 (the ‘‘CLP
3 A Member is defined as ‘‘any registered broker
or dealer that has been admitted to membership in
the Exchange.’’ See Exchange Rule 1.5(n).
4 See Securities Exchange Act Release No. 65225
(August 30, 2011), 76 FR 55148 (September 6, 2011)
(SR–BATS–2011–018).
5 As defined in BZX Rule 11.8(e)(1)(A), the term
‘‘ETP’’ means any security listed pursuant to
Exchange Rule 14.11.
6 See Securities Exchange Act Release No. 66422
(February 17, 2012), 77 FR 11179 (February 24,
2012) (SR–BATS–2012–010).
7 See Securities Exchange Act Release No. 72377
(June 12, 2014), 79 FR 34822 (June 18, 2014) (SR–
BATS–2014–024).
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
Program’’).8 On May 22, 2015, the
Exchange further modified Rule 14.13 to
eliminate the $5,000 application fee for
ETPs, effectively eliminating any
compulsory fees for both new ETP
issues and transfer listings in ETPs on
the Exchange.9 On October 1, 2015, the
Exchange started offering an incentive
payment to ETPs listed on the Exchange
based on the consolidated average daily
volume (‘‘CADV’’) of the ETP (the
‘‘Issuer Incentive Program’’) 10 and
subsequently made an administrative
change to the Issuer Incentive Program
that required an issuer to enroll in order
to receive payment.11 The Exchange is
now proposing to amend the Issuer
Incentive Program such that series of
Portfolio Depository Receipts, Index
Fund Shares, Trust Issued Receipts, and
Managed Fund Shares (‘‘Funds’’) listed
on the Exchange will no longer be
eligible to receive payments under the
Issuer Incentive Program. The Exchange
is also proposing that the LMM 12 in a
Fund 13 would receive a payment from
the Exchange based on the CADV of the
Fund, as described below (the ‘‘LMM
Partnership Program’’).
Specifically, the Exchange is
proposing that the Exchange would
provide payments to the LMM in a Fund
on a quarterly basis as follows: 14
CADV range
1,000,000–3,000,000 shares ......
3,000,001–5,000,000 shares ......
5,000,001–10,000,000 shares ....
10,000,001–20,000,000 shares ..
Annualized
payment
$3,000
10,000
50,000
100,000
8 See Securities Exchange Act Release No. 73414
(October 23, 2014), 79 FR 64434 (October 29, 2014)
(SR–BATS–2014–050).
9 See Securities Exchange Act Release No. 75085
(June 1, 2015), 80 FR 32190 (June 5, 2015) (SR–
BATS–2015–39).
10 See Securities Exchange Act Release No. 76113
(October 8, 2015), 80 FR 62142 (October 15, 2015)
(SR–BATS–2015–80) (the ‘‘Issuer Incentive Program
Filing’’).
11 See Securities Exchange Act Release No. 77960
(June 1, 2016), 81 FR 36632 (June 7, 2016) (SR–
BatsBZX–2016–20).
12 As defined in Rule 11.8(e)(1)(B), the term LMM
means a Market Maker registered with the Exchange
for a particular LMM Security that has committed
to maintain Minimum Performance Standards in
the LMM Security.
13 As noted above, the term ‘‘Fund’’ includes
Portfolio Depository Receipts, Index Fund Shares,
Trust Issued Receipts, and Managed Fund Shares,
which are defined in Rule 14.11(b), 14.11(c),
14.11(f), and 14.11(i), respectively, which the
Exchange may propose to expand in the future as
it adds products which may be listed on the
Exchange. Any such expansion would require the
Exchange to file a proposal with the Commission
under Rule 19b–4 of the Act.
14 The Exchange notes that the CADV standards
and proposed payments applicable to the LMM
Partnership Program are identical to the standards
and payments currently applicable under the Issuer
Incentive Program.
E:\FR\FM\20OCN1.SGM
20OCN1
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
management (‘‘AUM’’) for a Fund tend
to increase and AUM is a common
measure of a Fund’s success and is the
20,000,001–35,000,000 shares ..
250,000 basis for certain fees charged by a Fund.
Greater than 35,000,000 shares
400,000 As such, both the primary listing
exchange and the issuer experience
The LMM would only be eligible to
financial benefits as the CADV for a
receive such payments in quarters
Fund increases. For LMMs, however, as
15
during which it is a Qualified LMM
the CADV increases, the enhanced
for each full month that the Fund was
rebates that LMMs receive in securities
listed on the Exchange.
for which they are an LMM decrease.16
Because the payments would be
While this structure provides the
provided for each trading day, where a
potential for an LMM to financially
Fund had a CADV of 4,000,000 over the
share in the success of a Fund with a
course of a full calendar quarter that it
high CADV if the costs of making a
was listed on the Exchange, the LMM
market in the Fund, the enhanced LMM
for that Fund would receive a payment
rebates, and the typical market
of $2,500 (.25 * $10,000, the annualized
conditions in the Fund align properly,
payment for that CADV) at the end of
it does not guarantee it and, further,
the quarter. Where the same Fund had
even if the economics do align properly,
a CADV of 4,000,000, but was only
the rebate structure fails to account for
listed on the Exchange for exactly half
the LMM’s importance in that Fund
of the trading days in the calendar
achieving a high CADV.
quarter, the LMM for that Fund would
Based on the foregoing, the Exchange
receive a payment of $1,250 ((.25 *
believes that the current model of
$10,000) * .5) at the end of the quarter.
compensation for LMMs could be
The Exchange is proposing to make
amended to better reflect the role that
these changes as a means to equitably
LMMs play in the success of Funds by
allocate the revenues and expenses
having the Exchange direct payments to
associated with bringing a successful
the LMM. While the Issuer Incentive
Fund to market among the issuer, the
Program was originally designed to
listing exchange, and the LMM. For
create a more equitable and appropriate
example, in new Funds, the cost to a
allocation based on revenue and
firm of making a market as an LMM,
expenses associated with listing Funds,
such as holding inventory in the
upon further examination, the Exchange
security, is often not fully offset by the
believes that allowing LMMs to receive
revenue provided through enhanced
payment under the LMM Partnership
LMM rebates, as further discussed
Program will further enhance the
below, that it receives from the
equitability of the distribution of
Exchange. In such cases, LMMs often
revenues and expenses associated with
take on the role as LMM despite the
bringing a successful Fund to market.
negative economics based on the hope,
As such, the Exchange is proposing to
without guarantee, that the costs for
adopt the above described tiered
acting as an LMM will eventually be
payment structure for LMMs in Funds
reduced to a level lower than the
listed on the Exchange under the LMM
gradually decreasing enhanced LMM
Partnership Program.
rebates. Without an LMM taking this
The Exchange is not proposing to
risk to make markets in these new
make any changes to the Issuer
Funds, the products would likely be
Incentive Program as it currently applies
significantly less liquid and would have
to ETPs that are not Funds.
a greatly reduced likelihood of
The Exchange proposes to implement
achieving success.
the amendments to Rule 14.13(b)(2)(C)
As highlighted in the Issuer Incentive
Program Filing, the primary listing
16 See Exchange Fee Schedule, Footnote 14. The
exchange for a Fund earns additional
Exchange offers standard credits for LMM orders
that add liquidity in securities for which they are
trading fees through the outsized share
the LMM as follows: $0.0045 per share for securities
of intraday trading volume that a
with a CADV less than 1,000,000 shares; $0.0040
primary listed security typically garners per share for securities with a CADV from 1,000,000
for the listing exchange as well as
shares to 5,000,000 shares; $0.0035 per share for
securities with a CADV greater than 5,000,000
trading fees for orders participating in
shares. See also NYSE Arca Equities, Inc. Schedule
the opening and closing auctions. Such
of Fees and Charges for Exchange Services, https://
trading fees generally increase as the
www.nyse.com/publicdocs/nyse/markets/nyse-arca/
CADV for a Fund increases. Similarly,
NYSE_Arca_Marketplace_Fees.pdf. Standard
credits for LMM orders that add liquidity in
as the CADV increases for a Fund, so
securities for which they are an LMM are as
does the amount of assets under
follows: $0.0045 per share for securities with a
mstockstill on DSK3G9T082PROD with NOTICES
CADV range
Annualized
payment
15 As
defined in the fee schedule, the term
‘‘Qualified LMM’’ means an LMM that meets the
Minimum Performance Standards, as defined in
Rule 11.8(e)(1)(D).
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
CADV less than 1,000,000 shares; $0.0040 per share
for securities with a CADV between 1,000,000
shares and 3,000,000 shares; $0.0033 per share for
securities with a CADV greater than 3,000,000
shares.
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
72625
and to its fee schedule effective October
3, 2016.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder that
are applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6 of the Act.17
Specifically, the Exchange believes that
the proposed rule change is consistent
with Section 6(b)(4) and 6(b)(5) of the
Act,18 in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among issuers
and its Members and is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest, and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that the
proposed amendment to the fee
schedule to provide payment to the
LMM for a Fund listed on the Exchange
based on the CADV of the Fund is
reasonable, fair and equitable, and not
an unfairly discriminatory allocation of
fees and other charges, would promote
just and equitable principles of trade,
foster cooperation with persons engaged
in facilitating transactions in securities,
and remove impediments to and perfect
the mechanism of a free and open
market and a national market system
because it would apply equally to all
LMMs and create a distribution of fees
and other charges that reflects a more
equitable distribution among the
Exchange, issuer, and LMM of revenue
that a Fund listed on the Exchange
creates. The Exchange believes that each
of the issuer, the exchange, and the
LMM play a key role in the ultimate
success of a Fund. While no single party
can take an action that will determine
the ultimate success of a Fund, if just
one of the three parties falters at any
point in the life of the Fund, it can
determine the Fund’s failure. As such,
the process of bringing a successful
Fund to market requires the full
commitment of all three of the issuer,
the exchange, and the LMM. As
described above, trading fees for the
primary listing exchange generally
increase as the CADV for a Fund
increases. Similarly, as the CADV
17 15
18 15
E:\FR\FM\20OCN1.SGM
U.S.C. 78f.
U.S.C. 78f(b)(4) and (5).
20OCN1
mstockstill on DSK3G9T082PROD with NOTICES
72626
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
increases for a Fund, so does the
amount of AUM for a Fund tend to
increase, which is a common measure of
a Fund’s success and the basis for
certain fees charged by a Fund. As such,
both the primary listing exchange and
the issuer experience financial benefits
as the CADV for a Fund increases and
are rewarded for their commitment to
the Fund. For LMMs, however, as the
CADV increases, the enhanced rebates
that LMMs receive in securities for
which they are an LMM decrease. On its
face, this rebate structure makes sense:
As the CADV for a Fund increases, the
market for that Fund becomes more
liquid, spreads become tighter, and the
cost associated with making a market in
that Fund should generally decrease.
Practically, however, the rebate
structure fails to account for the LMM’s
important role in the Fund’s success.
The LMM Partnership Program, on the
other hand, acknowledges the
additional revenue brought to the
Exchange by virtue of a Fund listing on
the Exchange and moves to share that
revenue in a more equitable manner
based on the integral role that all three
parties—the issuer, the exchange, and
the LMM—play in the ultimate success
of a Fund. Specifically, the proposal is
designed to reward the LMM in that
Fund for such additional revenue,
which the Exchange believes creates a
more equitable and appropriate
relationship between the Exchange,
issuers, and LMMs. As such, the
Exchange believes that it is reasonable,
fair and equitable, and not unfairly
discriminatory allocation of fees and
other charges to provide payment to
LMMs in Funds listed on the Exchange
under the LMM Partnership Program.
The Exchange also believes that the
proposed amendment to its fee schedule
to provide tiered payments to LMMs in
Funds listed on the Exchange based on
the CADV of a Fund is a reasonable, fair
and equitable, and not unfairly
discriminatory allocation of fees and
other charges because it would create a
distribution of fees and other charges
applicable to all LMMs that are
commensurate with the additional
revenue that a Fund listed on the
Exchange creates for the Exchange
through executions occurring in the
auctions and additional shares executed
on the Exchange. As described above,
where the CADV of a Fund increases, so
does the additional trading fee revenue
earned by the primary listing exchange.
Similarly, as the CADV increases for a
Fund, typically so does the amount of
AUM for a Fund, which is the basis for
certain fees charged by a Fund. As such,
both the primary listing exchange and
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
the issuer experience financial benefits
as the CADV for a Fund increases.
Accordingly, the proposed tiers within
the LMM Partnership Program are
designed to reward the LMM in a Fund
on the basis of the additional revenue
potential that the Fund brings to the
Exchange and the issuer through
increased CADV. Further to this point,
the Exchange does not believe that the
proposal is unfairly discriminatory
because, as described above, the
annualized payments associated with
the various CADV tiers in the LMM
Partnership Program are designed based
on the approximate additional revenue
that the Exchange will receive from a
Fund listed on the Exchange within a
particular CADV tier and are identical to
those currently provided under the
Issuer Incentive Program. The Exchange
notes that certain LMMs in Funds in the
proposed tiers with higher CADV would
receive disproportionately higher
rebates than LMMs in Funds in other
tiers with lower CADV. The Exchange
believes it is equitable and not unfairly
discriminatory to provide a
disproportionately higher payment to
LMMs of Funds in higher tiers because
such Funds would likely bring a
disproportionately larger amount of
revenue to the Exchange from the
auctions the Exchange would conduct
for such securities and increased trading
activity on the Exchange in such
securities. The Exchange believes that
the additional revenue it will generate
from Funds that are eligible for the
LMM Partnership Program, including
Funds that qualify for the higher tiers,
will exceed the amount of such
payments to LMMs. To the extent the
additional revenue generated by Funds
that are eligible to participate in the
LMM Partnership Program does not
exceed the amount of such payments to
LMMs, the Exchange will modify the
structure of the LMM Partnership
Program such that the program does
generate revenue for the Exchange.
The Exchange further believes that it
is reasonable, fair and equitable, and not
unfairly discriminatory allocation of
fees and other charges, would promote
just and equitable principles of trade,
foster cooperation with persons engaged
in facilitating transactions in securities,
and remove impediments to and perfect
the mechanism of a free and open
market and a national market system,
and, in general, to protect investors and
the public interest to provide payment
to LMMs in Funds listed on the
Exchange through the LMM Partnership
Program because receiving payment
under the LMM Partnership Program
will provide additional incentives for
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
market makers to act as LMM in all
BZX-listed Funds, including newly
listed Funds. For the vast majority of
Funds, the LMM does not change after
the Fund is launched. Stated another
way, the LMM for a Fund at launch is
very likely to be the LMM for the Fund
for the foreseeable future. Because of
this low turnover in LMMs, the
Exchange believes that providing
payments to LMMs on the basis of
CADV will incentivize more market
makers to seek to act as an LMM in
more BZX-listed Funds. In particular,
the Exchange believes that the
implementation of the LMM Partnership
Program in conjunction with the low
turnover in LMMs for Funds would
make it more attractive for a market
maker to become an LMM at the launch
of a Fund in order to ensure that the
market maker does not miss out on the
opportunity to receive a payment under
the LMM Partnership at some point in
the future. This incentive to register as
an LMM in new Funds will benefit such
Funds by creating greater interest in
acting as an LMM and meeting the
associated quoting requirements. The
same mechanics under the LMM
Partnership Program that incentivize
market makers to register as LMMs in
Funds would also incentivize LMMs in
Funds to create the best market
conditions for a Fund to increase its
CADV and help it attract assets, which
likely includes quoting in tighter
spreads and at greater depth than they
otherwise would in the absence of the
LMM Partnership Program. Such tighter
spreads and greater depth would result
in enhanced market quality in BZXlisted Funds, which would also benefit
all market participants. As such, the
Exchange believes that aligning the
interests and incentives of the LMMs,
Fund issuers, and the Exchange will
create an ecosystem that benefits all
participants.
The Exchange further believes that it
is reasonable, fair and equitable, and not
unfairly discriminatory allocation of
fees and other charges, would promote
just and equitable principles of trade,
foster cooperation with persons engaged
in facilitating transactions in securities,
and remove impediments to and perfect
the mechanism of a free and open
market and a national market system,
and, in general, to protect investors and
the public interest because it is designed
to attract additional Fund listings to the
Exchange. Based on conversations with
numerous market participants, the
Exchange believes that the equitable
allocation of revenue generated from a
Fund listed on the Exchange under the
LMM Partnership Program would make
E:\FR\FM\20OCN1.SGM
20OCN1
mstockstill on DSK3G9T082PROD with NOTICES
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
the Exchange a more attractive listing
venue from both issuers’ and LMMs’
perspectives. As such, the Exchange
believes that the proposal is reasonable,
fair and equitable, and not unfairly
discriminatory in that the Exchange
believes that it will attract additional
Fund listings and LMMs in Funds,
which will, in turn, benefit the
Exchange and all other BZX-listed
Funds.
In addition, the Exchange does not
believe that it is unfairly discriminatory
to exclude Funds with a CADV of less
than 1,000,000 from the LMM
Partnership Program because such
Funds do not typically generate revenue
to the same degree as the higher CADV
products. The Exchange notes that
Funds with a CADV of less than
1,000,000 are eligible to participate in
the ETP CLP Program, which is
designed to incentivize market makers
to provide liquidity in less actively
traded products with the goal of
facilitating the growth of such
products.19
Based on the foregoing, the Exchange
believes that the proposed amendment
to the fee schedule to provide payment
to the LMM for a Fund listed on the
Exchange under the LMM Partnership
Program is a reasonable, equitable, and
non-discriminatory allocation of fees to
issuers and LMMs.
The Exchange believes that the
proposed amendment to the annual
listing fees in Rule 14.13(b)(2)(C) to
eliminate the payment to Funds under
the Issuer Incentive Program is
reasonable, fair and equitable, and not
an unfairly discriminatory allocation of
fees and other charges because it would
apply equally to all Funds and
eliminating the payment will allow the
Exchange to better allocate its resources
in order to make BZX a more attractive
listing venue for Funds. The payment to
Funds under the Issuer Incentive
Program has not had the impact that the
Exchange sought when it was
implemented. As noted above,
eliminating the payment to all Funds
under the Issuer Incentive Program will
allow the Exchange to reallocate its
resources in order to make BZX a more
attractive listing venue for Funds. The
Exchange does not believe that it is
unfairly discriminatory to have Funds
participate in the LMM Partnership
Program and non-Funds remain under
the Issuer Incentive Program because
the only ETPs currently listed on the
Exchange are Funds and the Exchange
19 Pursuant to Rule 11.8, Interpretation and Policy
.03(n), a security participating in the ETP CLP
Program will no longer be eligible to participate
once such security sustains CADV of 1,000,000
shares or more for three consecutive months.
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
will continue to evaluate both of the
LMM Partnership Program and the
Issuer Incentive Program and how they
should best apply to Funds and nonFunds moving forward. As such, the
Exchange believes that the proposal is
reasonable, fair and equitable, and not
an unfairly discriminatory allocation of
fees and other charges.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
With respect to the proposed new
pricing, the Exchange does not believe
that the changes burden competition,
but instead, enhance competition, as
they are intended to increase the
competitiveness of the Exchange’s
listings program by eliminating certain
payments under the Issuer Incentive
Program that have not garnered their
intended results and will providing [sic]
LMMs in Funds with quarterly
payments based on the CADV of the
Fund, which the Exchange believes will
be directly related to the amount of
additional revenue that the Exchange
receives from additional transactions in
the Fund. As such, the proposal is a
competitive proposal that is intended to
attract additional Fund listings and
LMMs in Funds, which will, in turn,
benefit the Exchange and all other BZXlisted Funds.
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. Suspension of SR–BatsBZX–2016–
60
Pursuant to Section 19(b)(3)(C) of the
Act,20 at any time within 60 days of the
date of filing of a proposed rule change
pursuant to Section 19(b)(1) of the
Act,21 the Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization 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. The
Commission believes it is appropriate in
20 15
21 15
PO 00000
U.S.C. 78s(b)(3)(C).
U.S.C. 78s(b)(1).
Frm 00066
Fmt 4703
Sfmt 4703
72627
the public interest to temporarily
suspend the proposal to solicit comment
on and further evaluate the statutory
basis for BZX’s proposal to adopt the
proposed LMM Partnership Program.
In temporarily suspending the
proposal, the Commission intends to
further assess whether the LMM
Partnership Program is consistent with
the statutory requirements applicable to
a national securities exchange under the
Act. In particular, the Commission will
assess whether the proposed rule
change satisfies the requirements of the
Act and the rules thereunder requiring,
among other things, that an exchange’s
rules provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using its facilities; not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers;
and do not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.22
Therefore, the Commission finds that
it is appropriate in the public interest,23
for the protection of investors, and
otherwise in furtherance of the purposes
of the Act, to temporarily suspend the
proposed rule change.
IV. Proceedings To Determine Whether
To Approve or Disapprove SR–
BatsBZX–2016–60
The Commission is instituting
proceedings pursuant to Sections
19(b)(3)(C) 24 and 19(b)(2) of the Act 25
to determine whether BZX’s proposed
rule change should be approved or
disapproved. Pursuant to Section
19(b)(2)(B) of the Act,26 the Commission
is providing notice of the grounds for
disapproval under consideration. As
discussed above, the Exchange proposes
to make quarterly payments to LMMs in
Funds with CADV of 1,000,000 or
higher. These payments would increase
22 See
15 U.S.C. 78f(b)(4), (5) and (8).
purposes of temporarily suspending the
proposed rule change, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
24 15 U.S.C. 78s(b)(3)(C). Once the Commission
temporarily suspends a proposed rule change,
Section 19(b)(3)(C) of the Act requires that the
Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule
change should be approved or disapproved.
25 15 U.S.C. 78s(b)(2).
26 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the
Act also provides that proceedings to determine
whether to disapprove a proposed rule change must
be concluded within 180 days of the date of
publication of notice of the filing of the proposed
rule change. Id. The time for conclusion of the
proceedings may be extended for up to 60 days if
the Commission finds good cause for such
extension and publishes its reasons for so finding.
Id.
23 For
E:\FR\FM\20OCN1.SGM
20OCN1
mstockstill on DSK3G9T082PROD with NOTICES
72628
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
as the CADV of the Fund increases, up
to a maximum annual payment of
$400,000 to the LMM of a Fund with a
CADV of 35,000,000 or more, and they
would not be accompanied by enhanced
market-quality requirements for the
LMM or be determined based on the
actual quoting or trading activity of the
LMM.
As noted above, the Exchange asserts
that the LMM Partnership Program is
designed to ‘‘equitably allocate the
revenues and expenses associated with
bringing a successful Fund to market
among the issuer, the listing exchange,
and the LMM.’’ The Exchange notes that
the Exchange’s LMM rebate structure
‘‘fails to account for the LMM’s
important role in [a] Fund’s success,’’
because ‘‘as the CADV increases, the
enhanced rebates that LMMs receive in
securities for which they are an LMM
decrease.’’ 27 The Exchange believes that
the LMM Partnership Program will
‘‘provide additional incentives for
market makers to act as LMM in all
[Exchange]-listed Funds, including
newly listed Funds.’’ 28
The Commission believes there are
questions as to whether the Exchange
has adequately explained why it is
consistent with the Act to make
substantial additional payments to
LMMs in the most-liquid ETFs—where
performance incentives would seem
least necessary to maintain market
quality—without the imposition of any
additional performance standards.
While the Exchange asserts that the
LMM Partnership Program may incent
market makers to become LMMs in
newly listed Funds, the Commission
does not believe it is clear how higher
payments to LMMs in the most-liquid
ETFs will encourage them to become
LMMs in less-liquid ETFs, particularly
given that the LMM Partnership
Program does not obligate participants
to become LMMs in any less-liquid
ETFs or impose additional performance
standards on them. As a result, the
connection between the proposed LMM
incentives and the desired LMM
behavior appears indirect and tenuous.
The Commission believes it is
appropriate to institute proceedings at
this time in view of the legal and policy
issues raised by the proposal. Institution
of proceedings does not indicate,
however, that the Commission has
reached any conclusions with respect to
the issues involved. The sections of the
Act and the rules thereunder which are
applicable to the proposed rule change
include:
27 See
28 See
Section II.A.1, supra.
Section II.A.2, supra.
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
• Section 6(b)(4) of the Act,29 which
requires that the rules of a national
securities exchange ‘‘provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members and issuers and other persons
using its facilities.’’
• Section 6(b)(5) of the Act,30 which
requires that the rules of a national
securities exchange be designed to,
among other things, ‘‘remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest’’ and not be ‘‘designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.’’
• Section 6(b)(8) of the Act,31 which
requires that the rules of a national
securities exchange ‘‘not impose any
burden on competition not necessary or
appropriate’’ in furtherance of the Act.
V. Commission’s Solicitation of
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as other relevant concerns. Such
comments should be submitted by
November 10, 2016. Rebuttal comments
should be submitted by November 25,
2016. Although there do not appear to
be any issues relevant to approval or
disapproval which would be facilitated
by an oral presentation of views, data,
and arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.32
The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the proposal, in addition to
any other comments they may wish to
submit about the proposed rule change.
Interested persons are invited to submit
written data, views, and arguments
concerning the proposed rule change,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
29 15
U.S.C. 78f(b)(4).
30 15 U.S.C. 78f(b)(5).
31 15 U.S.C. 78f(b)(8).
32 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
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–2016–60 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–2016–60. 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. 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
publicly available. All submissions
should refer to File Number SR–
BatsBZX–2016–60 and should be
submitted on or before November 10,
2016. Rebuttal comments should be
submitted by November 25, 2016.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,33 that File
Number SR–BatsBZX–2016–60, be and
hereby is, temporarily suspended. In
addition, the Commission is instituting
proceedings to determine whether the
proposed rule changes should be
approved or disapproved.
33 15
E:\FR\FM\20OCN1.SGM
U.S.C. 78s(b)(3)(C).
20OCN1
Federal Register / Vol. 81, No. 203 / Thursday, October 20, 2016 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–25350 Filed 10–19–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32318; File No. 812–14594]
First Investors Equity Funds, et al.;
Notice of Application
October 14, 2016.
AGENCY:
mstockstill on DSK3G9T082PROD with NOTICES
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to: (a) Section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d–1 under the Act to permit certain
joint arrangements and transactions.
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
November 8, 2016 and should be
accompanied by proof of service on the
applicants, in the form of an affidavit,
or, for lawyers, a certificate of service.
Pursuant to Rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants: Mary Carty, Esq., Foresters
Investment Management Company, Inc.,
40 Wall Street, New York, NY 10005.
FOR FURTHER INFORMATION CONTACT: KayMario Vobis, Senior Counsel, at (202)
551–6728 or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Chief
Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would permit the applicants to
participate in an interfund lending
APPLICANTS: First Investors Equity
facility where each Fund could lend
Funds, First Investors Income Funds,
money directly to and borrow money
First Investors Life Series Funds and
directly from other Funds to cover
First Investors Tax Exempt Funds (each unanticipated cash shortfalls, such as
a ‘‘Trust’’), each a Delaware statutory
unanticipated redemptions or trade
trust registered under the Act as an
fails.1 The Funds will not borrow under
open-end management investment
the facility for leverage purposes and
company with multiple series and
the loans’ duration will be no more than
Foresters Investment Management
7 days.2
Company, Inc. (the ‘‘Adviser’’), a New
2. Applicants anticipate that the
York corporation registered as an
proposed facility would provide a
investment adviser under the
borrowing Fund with a source of
Investment Advisers Act of 1940.
liquidity at a rate lower than the bank
DATES: Filing Dates: The application was borrowing rate at times when the cash
filed on December 23, 2015 and
position of the Fund is insufficient to
amended on May 20, 2016 and
1 Applicants request that the order apply to the
September 16, 2016.
applicants and to any existing or future registered
HEARING OR NOTIFICATION OF HEARING:
open-end management investment company or
An order granting the requested relief
series thereof for which the Adviser or any
will be issued unless the Commission
successor thereto or an investment adviser
orders a hearing. Interested persons may controlling, controlled by, or under common
control with the Adviser or any successor thereto
request a hearing by writing to the
serves as investment adviser (each a ‘‘Fund’’ and
Commission’s Secretary and serving
collectively the ‘‘Funds’’ and each such investment
applicants with a copy of the request,
adviser an ‘‘Adviser’’). For purposes of the
requested order, ‘‘successor’’ is limited to any entity
personally or by mail.
that results from a reorganization into another
Hearing requests should be received
jurisdiction or a change in the type of a business
by the Commission by 5:30 p.m. on
organization.
34 17
CFR 200.30–3(a)(57) and (58).
VerDate Sep<11>2014
16:40 Oct 19, 2016
Jkt 241001
2 Any Fund, however, will be able to call a loan
on one business day’s notice.
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
72629
meet temporary cash requirements. In
addition, Funds making short-term cash
loans directly to other Funds would
earn interest at a rate higher than they
otherwise could obtain from investing
their cash in repurchase agreements or
certain other short term money market
instruments. Thus, applicants assert that
the facility would benefit both
borrowing and lending Funds.
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the application. Among others,
the Adviser, through a designated
committee, would administer the
facility as a disinterested fiduciary as
part of its duties under the investment
management agreements with the Funds
and would receive no additional fee as
compensation for its services in
connection with the administration of
the facility. The facility would be
subject to oversight and certain
approvals by the Funds’ Board,
including, among others, approval of the
interest rate formula and of the method
for allocating loans across Funds, as
well as review of the process in place to
evaluate the liquidity implications for
the Funds. A Fund’s aggregate
outstanding interfund loans will not
exceed 15% of its net assets, and the
Fund’s loans to any one Fund will not
exceed 5% of the lending Fund’s net
assets.3
4. Applicants assert that the facility
does not raise the concerns underlying
section 12(d)(1) of the Act given that the
Funds are part of the same group of
investment companies and there will be
no duplicative costs or fees to the
Funds.4 Applicants also assert that the
proposed transactions do not raise the
concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as
the Funds would not engage in lending
transactions that unfairly benefit
insiders or are detrimental to the Funds.
Applicants state that the facility will
offer both reduced borrowing costs and
enhanced returns on loaned funds to all
participating Funds and each Fund
would have an equal opportunity to
borrow and lend on equal terms based
on an interest rate formula that is
objective and verifiable. With respect to
the relief from section 17(a)(2) of the
Act, applicants note that any collateral
pledged to secure an interfund loan
would be subject to the same conditions
imposed by any other lender to a Fund
3 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
4 Applicants state that the obligation to repay an
interfund loan could be deemed to constitute a
security for the purposes of sections 17(a)(1) and
12(d)(1) of the Act.
E:\FR\FM\20OCN1.SGM
20OCN1
]]>Agencies
[Federal Register Volume 81, Number 203 (Thursday, October 20, 2016)]
[Notices]
[Pages 72624-72629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25350]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79103; File No. SR-BatsBZX-2016-60]
Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change to Bats BZX Rule 14.13, Company
Listing Fees, and to the Bats BZX Fee Schedule; Suspension of and Order
Instituting Proceedings To Determine Whether To Approve or Disapprove
the Proposed Rule Change
October 14, 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 September 29, 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 and
II 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 and is, pursuant to
Section 19(b)(3)(C) of the Act, hereby: (1) Temporarily suspending the
proposed rule change; and (2) instituting proceedings to determine
whether to approve or disapprove the proposal.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the fees applicable to
securities listed on the Exchange, which are set forth in BZX Rule
14.13 as well as to amend the fee schedule applicable to Members \3\
and non-Members of the Exchange pursuant to Exchange Rules 15.1(a) and
(c). Changes to the Exchange's fees pursuant to this proposal are
effective upon filing.
---------------------------------------------------------------------------
\3\ A 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
On August 30, 2011, the Exchange received approval of rules
applicable to the qualification, listing, and delisting of companies on
the Exchange,\4\ which it modified on February 8, 2012 in order to
adopt pricing for the listing of exchange traded products (``ETPs'')
\5\ on the Exchange,\6\ which it subsequently modified again on June 4,
2014.\7\ On October 16, 2014, the Exchange modified Rule 14.13,
entitled ``Company Listing Fees'' to eliminate the annual fees for ETPs
not participating in the Exchange's Competitive Liquidity Provider
Program pursuant to Rule 11.8, Interpretation and Policy .02 (the ``CLP
Program'').\8\ On May 22, 2015, the Exchange further modified Rule
14.13 to eliminate the $5,000 application fee for ETPs, effectively
eliminating any compulsory fees for both new ETP issues and transfer
listings in ETPs on the Exchange.\9\ On October 1, 2015, the Exchange
started offering an incentive payment to ETPs listed on the Exchange
based on the consolidated average daily volume (``CADV'') of the ETP
(the ``Issuer Incentive Program'') \10\ and subsequently made an
administrative change to the Issuer Incentive Program that required an
issuer to enroll in order to receive payment.\11\ The Exchange is now
proposing to amend the Issuer Incentive Program such that series of
Portfolio Depository Receipts, Index Fund Shares, Trust Issued
Receipts, and Managed Fund Shares (``Funds'') listed on the Exchange
will no longer be eligible to receive payments under the Issuer
Incentive Program. The Exchange is also proposing that the LMM \12\ in
a Fund \13\ would receive a payment from the Exchange based on the CADV
of the Fund, as described below (the ``LMM Partnership Program'').
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 65225 (August 30,
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
\5\ As defined in BZX Rule 11.8(e)(1)(A), the term ``ETP'' means
any security listed pursuant to Exchange Rule 14.11.
\6\ See Securities Exchange Act Release No. 66422 (February 17,
2012), 77 FR 11179 (February 24, 2012) (SR-BATS-2012-010).
\7\ See Securities Exchange Act Release No. 72377 (June 12,
2014), 79 FR 34822 (June 18, 2014) (SR-BATS-2014-024).
\8\ See Securities Exchange Act Release No. 73414 (October 23,
2014), 79 FR 64434 (October 29, 2014) (SR-BATS-2014-050).
\9\ See Securities Exchange Act Release No. 75085 (June 1,
2015), 80 FR 32190 (June 5, 2015) (SR-BATS-2015-39).
\10\ See Securities Exchange Act Release No. 76113 (October 8,
2015), 80 FR 62142 (October 15, 2015) (SR-BATS-2015-80) (the
``Issuer Incentive Program Filing'').
\11\ See Securities Exchange Act Release No. 77960 (June 1,
2016), 81 FR 36632 (June 7, 2016) (SR-BatsBZX-2016-20).
\12\ As defined in Rule 11.8(e)(1)(B), the term LMM means a
Market Maker registered with the Exchange for a particular LMM
Security that has committed to maintain Minimum Performance
Standards in the LMM Security.
\13\ As noted above, the term ``Fund'' includes Portfolio
Depository Receipts, Index Fund Shares, Trust Issued Receipts, and
Managed Fund Shares, which are defined in Rule 14.11(b), 14.11(c),
14.11(f), and 14.11(i), respectively, which the Exchange may propose
to expand in the future as it adds products which may be listed on
the Exchange. Any such expansion would require the Exchange to file
a proposal with the Commission under Rule 19b-4 of the Act.
---------------------------------------------------------------------------
Specifically, the Exchange is proposing that the Exchange would
provide payments to the LMM in a Fund on a quarterly basis as follows:
\14\
---------------------------------------------------------------------------
\14\ The Exchange notes that the CADV standards and proposed
payments applicable to the LMM Partnership Program are identical to
the standards and payments currently applicable under the Issuer
Incentive Program.
------------------------------------------------------------------------
Annualized
CADV range payment
------------------------------------------------------------------------
1,000,000-3,000,000 shares.................................. $3,000
3,000,001-5,000,000 shares.................................. 10,000
5,000,001-10,000,000 shares................................. 50,000
10,000,001-20,000,000 shares................................ 100,000
[[Page 72625]]
20,000,001-35,000,000 shares................................ 250,000
Greater than 35,000,000 shares.............................. 400,000
------------------------------------------------------------------------
The LMM would only be eligible to receive such payments in quarters
during which it is a Qualified LMM \15\ for each full month that the
Fund was listed on the Exchange.
---------------------------------------------------------------------------
\15\ As defined in the fee schedule, the term ``Qualified LMM''
means an LMM that meets the Minimum Performance Standards, as
defined in Rule 11.8(e)(1)(D).
---------------------------------------------------------------------------
Because the payments would be provided for each trading day, where
a Fund had a CADV of 4,000,000 over the course of a full calendar
quarter that it was listed on the Exchange, the LMM for that Fund would
receive a payment of $2,500 (.25 * $10,000, the annualized payment for
that CADV) at the end of the quarter. Where the same Fund had a CADV of
4,000,000, but was only listed on the Exchange for exactly half of the
trading days in the calendar quarter, the LMM for that Fund would
receive a payment of $1,250 ((.25 * $10,000) * .5) at the end of the
quarter.
The Exchange is proposing to make these changes as a means to
equitably allocate the revenues and expenses associated with bringing a
successful Fund to market among the issuer, the listing exchange, and
the LMM. For example, in new Funds, the cost to a firm of making a
market as an LMM, such as holding inventory in the security, is often
not fully offset by the revenue provided through enhanced LMM rebates,
as further discussed below, that it receives from the Exchange. In such
cases, LMMs often take on the role as LMM despite the negative
economics based on the hope, without guarantee, that the costs for
acting as an LMM will eventually be reduced to a level lower than the
gradually decreasing enhanced LMM rebates. Without an LMM taking this
risk to make markets in these new Funds, the products would likely be
significantly less liquid and would have a greatly reduced likelihood
of achieving success.
As highlighted in the Issuer Incentive Program Filing, the primary
listing exchange for a Fund earns additional trading fees through the
outsized share of intraday trading volume that a primary listed
security typically garners for the listing exchange as well as trading
fees for orders participating in the opening and closing auctions. Such
trading fees generally increase as the CADV for a Fund increases.
Similarly, as the CADV increases for a Fund, so does the amount of
assets under management (``AUM'') for a Fund tend to increase and AUM
is a common measure of a Fund's success and is the basis for certain
fees charged by a Fund. As such, both the primary listing exchange and
the issuer experience financial benefits as the CADV for a Fund
increases. For LMMs, however, as the CADV increases, the enhanced
rebates that LMMs receive in securities for which they are an LMM
decrease.\16\ While this structure provides the potential for an LMM to
financially share in the success of a Fund with a high CADV if the
costs of making a market in the Fund, the enhanced LMM rebates, and the
typical market conditions in the Fund align properly, it does not
guarantee it and, further, even if the economics do align properly, the
rebate structure fails to account for the LMM's importance in that Fund
achieving a high CADV.
---------------------------------------------------------------------------
\16\ See Exchange Fee Schedule, Footnote 14. The Exchange offers
standard credits for LMM orders that add liquidity in securities for
which they are the LMM as follows: $0.0045 per share for securities
with a CADV less than 1,000,000 shares; $0.0040 per share for
securities with a CADV from 1,000,000 shares to 5,000,000 shares;
$0.0035 per share for securities with a CADV greater than 5,000,000
shares. See also NYSE Arca Equities, Inc. Schedule of Fees and
Charges for Exchange Services, https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf. Standard credits
for LMM orders that add liquidity in securities for which they are
an LMM are as follows: $0.0045 per share for securities with a CADV
less than 1,000,000 shares; $0.0040 per share for securities with a
CADV between 1,000,000 shares and 3,000,000 shares; $0.0033 per
share for securities with a CADV greater than 3,000,000 shares.
---------------------------------------------------------------------------
Based on the foregoing, the Exchange believes that the current
model of compensation for LMMs could be amended to better reflect the
role that LMMs play in the success of Funds by having the Exchange
direct payments to the LMM. While the Issuer Incentive Program was
originally designed to create a more equitable and appropriate
allocation based on revenue and expenses associated with listing Funds,
upon further examination, the Exchange believes that allowing LMMs to
receive payment under the LMM Partnership Program will further enhance
the equitability of the distribution of revenues and expenses
associated with bringing a successful Fund to market. As such, the
Exchange is proposing to adopt the above described tiered payment
structure for LMMs in Funds listed on the Exchange under the LMM
Partnership Program.
The Exchange is not proposing to make any changes to the Issuer
Incentive Program as it currently applies to ETPs that are not Funds.
The Exchange proposes to implement the amendments to Rule
14.13(b)(2)(C) and to its fee schedule effective October 3, 2016.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6 of the Act.\17\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) and 6(b)(5) of the Act,\18\ in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among issuers and its Members and is designed to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, and are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f.
\18\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed amendment to the fee
schedule to provide payment to the LMM for a Fund listed on the
Exchange based on the CADV of the Fund is reasonable, fair and
equitable, and not an unfairly discriminatory allocation of fees and
other charges, would promote just and equitable principles of trade,
foster cooperation with persons engaged in facilitating transactions in
securities, and remove impediments to and perfect the mechanism of a
free and open market and a national market system because it would
apply equally to all LMMs and create a distribution of fees and other
charges that reflects a more equitable distribution among the Exchange,
issuer, and LMM of revenue that a Fund listed on the Exchange creates.
The Exchange believes that each of the issuer, the exchange, and the
LMM play a key role in the ultimate success of a Fund. While no single
party can take an action that will determine the ultimate success of a
Fund, if just one of the three parties falters at any point in the life
of the Fund, it can determine the Fund's failure. As such, the process
of bringing a successful Fund to market requires the full commitment of
all three of the issuer, the exchange, and the LMM. As described above,
trading fees for the primary listing exchange generally increase as the
CADV for a Fund increases. Similarly, as the CADV
[[Page 72626]]
increases for a Fund, so does the amount of AUM for a Fund tend to
increase, which is a common measure of a Fund's success and the basis
for certain fees charged by a Fund. As such, both the primary listing
exchange and the issuer experience financial benefits as the CADV for a
Fund increases and are rewarded for their commitment to the Fund. For
LMMs, however, as the CADV increases, the enhanced rebates that LMMs
receive in securities for which they are an LMM decrease. On its face,
this rebate structure makes sense: As the CADV for a Fund increases,
the market for that Fund becomes more liquid, spreads become tighter,
and the cost associated with making a market in that Fund should
generally decrease. Practically, however, the rebate structure fails to
account for the LMM's important role in the Fund's success. The LMM
Partnership Program, on the other hand, acknowledges the additional
revenue brought to the Exchange by virtue of a Fund listing on the
Exchange and moves to share that revenue in a more equitable manner
based on the integral role that all three parties--the issuer, the
exchange, and the LMM--play in the ultimate success of a Fund.
Specifically, the proposal is designed to reward the LMM in that Fund
for such additional revenue, which the Exchange believes creates a more
equitable and appropriate relationship between the Exchange, issuers,
and LMMs. As such, the Exchange believes that it is reasonable, fair
and equitable, and not unfairly discriminatory allocation of fees and
other charges to provide payment to LMMs in Funds listed on the
Exchange under the LMM Partnership Program.
The Exchange also believes that the proposed amendment to its fee
schedule to provide tiered payments to LMMs in Funds listed on the
Exchange based on the CADV of a Fund is a reasonable, fair and
equitable, and not unfairly discriminatory allocation of fees and other
charges because it would create a distribution of fees and other
charges applicable to all LMMs that are commensurate with the
additional revenue that a Fund listed on the Exchange creates for the
Exchange through executions occurring in the auctions and additional
shares executed on the Exchange. As described above, where the CADV of
a Fund increases, so does the additional trading fee revenue earned by
the primary listing exchange. Similarly, as the CADV increases for a
Fund, typically so does the amount of AUM for a Fund, which is the
basis for certain fees charged by a Fund. As such, both the primary
listing exchange and the issuer experience financial benefits as the
CADV for a Fund increases. Accordingly, the proposed tiers within the
LMM Partnership Program are designed to reward the LMM in a Fund on the
basis of the additional revenue potential that the Fund brings to the
Exchange and the issuer through increased CADV. Further to this point,
the Exchange does not believe that the proposal is unfairly
discriminatory because, as described above, the annualized payments
associated with the various CADV tiers in the LMM Partnership Program
are designed based on the approximate additional revenue that the
Exchange will receive from a Fund listed on the Exchange within a
particular CADV tier and are identical to those currently provided
under the Issuer Incentive Program. The Exchange notes that certain
LMMs in Funds in the proposed tiers with higher CADV would receive
disproportionately higher rebates than LMMs in Funds in other tiers
with lower CADV. The Exchange believes it is equitable and not unfairly
discriminatory to provide a disproportionately higher payment to LMMs
of Funds in higher tiers because such Funds would likely bring a
disproportionately larger amount of revenue to the Exchange from the
auctions the Exchange would conduct for such securities and increased
trading activity on the Exchange in such securities. The Exchange
believes that the additional revenue it will generate from Funds that
are eligible for the LMM Partnership Program, including Funds that
qualify for the higher tiers, will exceed the amount of such payments
to LMMs. To the extent the additional revenue generated by Funds that
are eligible to participate in the LMM Partnership Program does not
exceed the amount of such payments to LMMs, the Exchange will modify
the structure of the LMM Partnership Program such that the program does
generate revenue for the Exchange.
The Exchange further believes that it is reasonable, fair and
equitable, and not unfairly discriminatory allocation of fees and other
charges, would promote just and equitable principles of trade, foster
cooperation with persons engaged in facilitating transactions in
securities, and remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest to provide payment to LMMs in
Funds listed on the Exchange through the LMM Partnership Program
because receiving payment under the LMM Partnership Program will
provide additional incentives for market makers to act as LMM in all
BZX-listed Funds, including newly listed Funds. For the vast majority
of Funds, the LMM does not change after the Fund is launched. Stated
another way, the LMM for a Fund at launch is very likely to be the LMM
for the Fund for the foreseeable future. Because of this low turnover
in LMMs, the Exchange believes that providing payments to LMMs on the
basis of CADV will incentivize more market makers to seek to act as an
LMM in more BZX-listed Funds. In particular, the Exchange believes that
the implementation of the LMM Partnership Program in conjunction with
the low turnover in LMMs for Funds would make it more attractive for a
market maker to become an LMM at the launch of a Fund in order to
ensure that the market maker does not miss out on the opportunity to
receive a payment under the LMM Partnership at some point in the
future. This incentive to register as an LMM in new Funds will benefit
such Funds by creating greater interest in acting as an LMM and meeting
the associated quoting requirements. The same mechanics under the LMM
Partnership Program that incentivize market makers to register as LMMs
in Funds would also incentivize LMMs in Funds to create the best market
conditions for a Fund to increase its CADV and help it attract assets,
which likely includes quoting in tighter spreads and at greater depth
than they otherwise would in the absence of the LMM Partnership
Program. Such tighter spreads and greater depth would result in
enhanced market quality in BZX-listed Funds, which would also benefit
all market participants. As such, the Exchange believes that aligning
the interests and incentives of the LMMs, Fund issuers, and the
Exchange will create an ecosystem that benefits all participants.
The Exchange further believes that it is reasonable, fair and
equitable, and not unfairly discriminatory allocation of fees and other
charges, would promote just and equitable principles of trade, foster
cooperation with persons engaged in facilitating transactions in
securities, and remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest because it is designed to
attract additional Fund listings to the Exchange. Based on
conversations with numerous market participants, the Exchange believes
that the equitable allocation of revenue generated from a Fund listed
on the Exchange under the LMM Partnership Program would make
[[Page 72627]]
the Exchange a more attractive listing venue from both issuers' and
LMMs' perspectives. As such, the Exchange believes that the proposal is
reasonable, fair and equitable, and not unfairly discriminatory in that
the Exchange believes that it will attract additional Fund listings and
LMMs in Funds, which will, in turn, benefit the Exchange and all other
BZX-listed Funds.
In addition, the Exchange does not believe that it is unfairly
discriminatory to exclude Funds with a CADV of less than 1,000,000 from
the LMM Partnership Program because such Funds do not typically
generate revenue to the same degree as the higher CADV products. The
Exchange notes that Funds with a CADV of less than 1,000,000 are
eligible to participate in the ETP CLP Program, which is designed to
incentivize market makers to provide liquidity in less actively traded
products with the goal of facilitating the growth of such products.\19\
---------------------------------------------------------------------------
\19\ Pursuant to Rule 11.8, Interpretation and Policy .03(n), a
security participating in the ETP CLP Program will no longer be
eligible to participate once such security sustains CADV of
1,000,000 shares or more for three consecutive months.
---------------------------------------------------------------------------
Based on the foregoing, the Exchange believes that the proposed
amendment to the fee schedule to provide payment to the LMM for a Fund
listed on the Exchange under the LMM Partnership Program is a
reasonable, equitable, and non-discriminatory allocation of fees to
issuers and LMMs.
The Exchange believes that the proposed amendment to the annual
listing fees in Rule 14.13(b)(2)(C) to eliminate the payment to Funds
under the Issuer Incentive Program is reasonable, fair and equitable,
and not an unfairly discriminatory allocation of fees and other charges
because it would apply equally to all Funds and eliminating the payment
will allow the Exchange to better allocate its resources in order to
make BZX a more attractive listing venue for Funds. The payment to
Funds under the Issuer Incentive Program has not had the impact that
the Exchange sought when it was implemented. As noted above,
eliminating the payment to all Funds under the Issuer Incentive Program
will allow the Exchange to reallocate its resources in order to make
BZX a more attractive listing venue for Funds. The Exchange does not
believe that it is unfairly discriminatory to have Funds participate in
the LMM Partnership Program and non-Funds remain under the Issuer
Incentive Program because the only ETPs currently listed on the
Exchange are Funds and the Exchange will continue to evaluate both of
the LMM Partnership Program and the Issuer Incentive Program and how
they should best apply to Funds and non-Funds moving forward. As such,
the Exchange believes that the proposal is reasonable, fair and
equitable, and not an unfairly discriminatory allocation of fees and
other charges.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. With
respect to the proposed new pricing, the Exchange does not believe that
the changes burden competition, but instead, enhance competition, as
they are intended to increase the competitiveness of the Exchange's
listings program by eliminating certain payments under the Issuer
Incentive Program that have not garnered their intended results and
will providing [sic] LMMs in Funds with quarterly payments based on the
CADV of the Fund, which the Exchange believes will be directly related
to the amount of additional revenue that the Exchange receives from
additional transactions in the Fund. As such, the proposal is a
competitive proposal that is intended to attract additional Fund
listings and LMMs in Funds, which will, in turn, benefit the Exchange
and all other BZX-listed Funds.
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. Suspension of SR-BatsBZX-2016-60
Pursuant to Section 19(b)(3)(C) of the Act,\20\ at any time within
60 days of the date of filing of a proposed rule change pursuant to
Section 19(b)(1) of the Act,\21\ the Commission summarily may
temporarily suspend the change in the rules of a self-regulatory
organization 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. The
Commission believes it is appropriate in the public interest to
temporarily suspend the proposal to solicit comment on and further
evaluate the statutory basis for BZX's proposal to adopt the proposed
LMM Partnership Program.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(3)(C).
\21\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
In temporarily suspending the proposal, the Commission intends to
further assess whether the LMM Partnership Program is consistent with
the statutory requirements applicable to a national securities exchange
under the Act. In particular, the Commission will assess whether the
proposed rule change satisfies the requirements of the Act and the
rules thereunder requiring, among other things, that an exchange's
rules provide for the equitable allocation of reasonable fees among
members, issuers, and other persons using its facilities; not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers; and do not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.\22\
---------------------------------------------------------------------------
\22\ See 15 U.S.C. 78f(b)(4), (5) and (8).
---------------------------------------------------------------------------
Therefore, the Commission finds that it is appropriate in the
public interest,\23\ for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule change.
---------------------------------------------------------------------------
\23\ For purposes of temporarily suspending the proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
IV. Proceedings To Determine Whether To Approve or Disapprove SR-
BatsBZX-2016-60
The Commission is instituting proceedings pursuant to Sections
19(b)(3)(C) \24\ and 19(b)(2) of the Act \25\ to determine whether
BZX's proposed rule change should be approved or disapproved. Pursuant
to Section 19(b)(2)(B) of the Act,\26\ the Commission is providing
notice of the grounds for disapproval under consideration. As discussed
above, the Exchange proposes to make quarterly payments to LMMs in
Funds with CADV of 1,000,000 or higher. These payments would increase
[[Page 72628]]
as the CADV of the Fund increases, up to a maximum annual payment of
$400,000 to the LMM of a Fund with a CADV of 35,000,000 or more, and
they would not be accompanied by enhanced market-quality requirements
for the LMM or be determined based on the actual quoting or trading
activity of the LMM.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\25\ 15 U.S.C. 78s(b)(2).
\26\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also
provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
Id. The time for conclusion of the proceedings may be extended for
up to 60 days if the Commission finds good cause for such extension
and publishes its reasons for so finding. Id.
---------------------------------------------------------------------------
As noted above, the Exchange asserts that the LMM Partnership
Program is designed to ``equitably allocate the revenues and expenses
associated with bringing a successful Fund to market among the issuer,
the listing exchange, and the LMM.'' The Exchange notes that the
Exchange's LMM rebate structure ``fails to account for the LMM's
important role in [a] Fund's success,'' because ``as the CADV
increases, the enhanced rebates that LMMs receive in securities for
which they are an LMM decrease.'' \27\ The Exchange believes that the
LMM Partnership Program will ``provide additional incentives for market
makers to act as LMM in all [Exchange]-listed Funds, including newly
listed Funds.'' \28\
---------------------------------------------------------------------------
\27\ See Section II.A.1, supra.
\28\ See Section II.A.2, supra.
---------------------------------------------------------------------------
The Commission believes there are questions as to whether the
Exchange has adequately explained why it is consistent with the Act to
make substantial additional payments to LMMs in the most-liquid ETFs--
where performance incentives would seem least necessary to maintain
market quality--without the imposition of any additional performance
standards. While the Exchange asserts that the LMM Partnership Program
may incent market makers to become LMMs in newly listed Funds, the
Commission does not believe it is clear how higher payments to LMMs in
the most-liquid ETFs will encourage them to become LMMs in less-liquid
ETFs, particularly given that the LMM Partnership Program does not
obligate participants to become LMMs in any less-liquid ETFs or impose
additional performance standards on them. As a result, the connection
between the proposed LMM incentives and the desired LMM behavior
appears indirect and tenuous.
The Commission believes it is appropriate to institute proceedings
at this time in view of the legal and policy issues raised by the
proposal. Institution of proceedings does not indicate, however, that
the Commission has reached any conclusions with respect to the issues
involved. The sections of the Act and the rules thereunder which are
applicable to the proposed rule change include:
Section 6(b)(4) of the Act,\29\ which requires that the
rules of a national securities exchange ``provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities.''
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Section 6(b)(5) of the Act,\30\ which requires that the
rules of a national securities exchange be designed to, among other
things, ``remove impediments to and perfect the mechanism of a free and
open market and a national market system, and, in general, to protect
investors and the public interest'' and not be ``designed to permit
unfair discrimination between customers, issuers, brokers, or
dealers.''
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Section 6(b)(8) of the Act,\31\ which requires that the
rules of a national securities exchange ``not impose any burden on
competition not necessary or appropriate'' in furtherance of the Act.
---------------------------------------------------------------------------
\31\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
V. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as other relevant
concerns. Such comments should be submitted by November 10, 2016.
Rebuttal comments should be submitted by November 25, 2016. Although
there do not appear to be any issues relevant to approval or
disapproval which would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4, any request for an opportunity to make an oral
presentation.\32\
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency and
merit of the Exchange's statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change. Interested persons are invited to submit written
data, views, and arguments concerning the proposed rule change,
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-2016-60 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-2016-60. 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. 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 publicly available. All submissions should refer to File Number
SR-BatsBZX-2016-60 and should be submitted on or before November 10,
2016. Rebuttal comments should be submitted by November 25, 2016.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\33\ that File Number SR-BatsBZX-2016-60, be and hereby is,
temporarily suspended. In addition, the Commission is instituting
proceedings to determine whether the proposed rule changes should be
approved or disapproved.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(C).
[[Page 72629]]
---------------------------------------------------------------------------
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------
\34\ 17 CFR 200.30-3(a)(57) and (58).
---------------------------------------------------------------------------
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25350 Filed 10-19-16; 8:45 am]
BILLING CODE 8011-01-P
