Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule To Adopt Fees for EDGA Summary Depth and Amend Fees for EDGA Depth, 892-898 [2016-31859]

Download as PDF 892 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices mstockstill on DSK3G9T082PROD with NOTICES the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.2 The purchase of Creation Units by a Fund of Funds directly from a Fund will be accomplished in accordance with the policies of the Fund of Funds and will be based on the NAVs of the Funds. 9. Applicants also request relief to permit a Feeder Fund to acquire shares of another registered investment company managed by the Adviser having substantially the same investment objectives as the Feeder Fund (‘‘Master Fund’’) beyond the limitations in section 12(d)(1)(A) and permit the Master Fund, and any principal underwriter for the Master Fund, to sell shares of the Master Fund to the Feeder Fund beyond the limitations in section 12(d)(1)(B). 10. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. 2 The requested relief would apply to direct sales of shares in Creation Units by a Fund to a Fund of Funds and redemptions of those shares. Applicants, moreover, are not seeking relief from section 17(a) for, and the requested relief will not apply to, transactions where a Fund could be deemed an Affiliated Person, or a Second-Tier Affiliate, of a Fund of Funds because an Adviser or an entity controlling, controlled by or under common control with an Adviser provides investment advisory services to that Fund of Funds. VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016–31860 Filed 1–3–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79699; File No. SR– BatsEDGA–2016–32] Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule To Adopt Fees for EDGA Summary Depth and Amend Fees for EDGA Depth December 28, 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 December 15, 2016, Bats EDGA Exchange, Inc. (‘‘EDGA’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the Market Data section of its fee schedule to: (i) Adopt fees for a new market data product called EDGA Summary Depth; and (ii) amend the fees for EDGA Depth. 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. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 2 17 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 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 the Market Data section of its fee schedule to: (i) Adopt fees for a new market data product called EDGA Summary Depth; and (ii) amend the fees for EDGA Depth. EDGA Summary Depth EDGA Summary Depth is a data feed that will provide aggregated two-sided quotations for all displayed orders entered into the System 5 for up to five (5) price levels for securities traded on the Exchange and for which the Exchange reports quotes under the Consolidated Tape Association (‘‘CTA’’) Plan or the Nasdaq/UTP Plan.6 EDGA Summary Depth will also contain the individual last sale information, Market Status, Trading Status, and Trade Break messages. The individual last sale information will include the price, size, and time of execution. The last sale message will also include the cumulative number of shares executed on the Exchange for that trading day. The Exchange intends to begin to offer EDGA Summary Depth on January 3, 2017.7 The Exchange now proposes to amend its fee schedule to incorporate fees for distribution of EDGA Summary Depth to subscribers.8 The proposed fees include 5 ‘‘System’’ is defined as the ‘‘the electronic communications and trading facility designated by the Board through which securities orders of Users Are consolidated for ranking, execution and, when applicable, routing away.’’ See Exchange Rule 1.5(cc). 6 See Exchange Rule 13.8(f). 7 See Reminder: Bats Global Markets to Introduce Bats Summary Depth Feeds on January 3, 2017, https://cdn.batstrading.com/resources/release_ notes/2017/Reminder-Bats-Global-Markets-toIntroduce-Bats-Summary-Depth-Feeds-on-Jan-32017.pdf. 8 The Exchange notes that its affiliated exchanges, Bats EDGX Exchange, Inc. (‘‘EDGX’’), Bats BZX Exchange, Inc. (‘‘BZX’’) and Bats BYX Exchange, E:\FR\FM\04JAN1.SGM 04JAN1 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices mstockstill on DSK3G9T082PROD with NOTICES the following, each of which are described in detail below: (i) Distribution Fees for both Internal and External Distributors; 9 (ii) Usage Fees for both Professional 10 and NonProfessional 11 Users; (iii) an Enterprise Fee; and (iv) a Digital Media Enterprise Fee. Distribution Fees. As proposed, each Internal Distributor that receives EDGA Summary Depth shall pay a fee of $2,500 per month. The Exchange does not propose to charge any User fees for EDGA Summary Depth where the data is received and subsequently internally distributed to Professional or NonProfessional Users. In addition, the Exchange proposes to charge also External Distributors that receive EDGA Summary Depth a fee of $2,500 per month. User Fees. The Exchange proposes to charge External Distributors that redistribute EDGA Summary Depth different fees for their Professional Users and Non-Professional Users. The Exchange will assess a monthly fee for Professional Users of $2.50 per User. Non-Professional Users will be assessed a monthly fee of $0.10 per User. The Exchange does not propose to charge per User fees to Internal Distributors. External Distributors that receive EDGA Summary Depth will be required Inc. (‘‘BYX’’, together with the Exchange, EDGX and BZX, the ‘‘Bats Exchanges’’), also intent to file proposed rule changes with Commission to adopt similar fees for their respective Summary Depth market data product. 9 A ‘‘Distributor’’ is defined as ‘‘any entity that receives the Exchange Market Data product directly from the Exchange or indirectly through another entity and then distributes it internally or externally to a third party.’’ See the Exchange’s fee schedule available at https://www.bats.com/us/equities/ membership/fee_schedule/edga/. An ‘‘Internal Distributor’’ is defined as ‘‘a Distributor that receives the Exchange Market Data product and then distributes that data to one or more Users within the Distributor’s own entity.’’ Id. An ‘‘External Distributor’’ is defined as ‘‘a Distributor that receives the Exchange Market Data product and then distributes that data to a third party or one or more Users outside the Distributor’s own entity.’’ Id.’’ 10 A ‘‘Professional User’’ is defined as ‘‘any User other than a Non-Professional User.’’ See the Exchange’s fee schedule available at https:// www.bats.com/us/equities/membership/fee_ schedule/edga/. 11 A ‘‘Non-Professional User’’ is defined as ‘‘a natural person who is not: (i) Registered or qualified in any capacity with the Commission, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association; (ii) engaged as an ‘‘investment adviser’’ as that term is defined in Section 202(a)(11) of the Investment Advisers Act of 1940 (whether or not registered or qualified under that Act); or (iii) employed by a bank or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt.’’ Id. VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 to count every Professional User and Non-Professional User to which they provide EDGA Summary Depth, the requirements for which are identical to that currently in place for other market data products offered by the Exchange.12 Thus, the External Distributor’s count will include every person and device that accesses the data regardless of the purpose for which the individual or device uses the data. External Distributors must report all Professional and Non-Professional Users in accordance with the following: • In connection with an External Distributor’s distribution of EDGA Summary Depth, the Distributor should count as one User each unique User that the Distributor has entitled to have access to EDGA Summary Depth. However, where a device is dedicated specifically to a single individual, the Distributor should count only the individual and need not count the device. • The External Distributor should identify and report each unique User. If a User uses the same unique method to gain access to EDGA Summary Depth, the Distributor should count that as one User. However, if a unique User uses multiple methods to gain access to EDGA Summary Depth (e.g., a single User has multiple passwords and user identifications), the External Distributor should report all of those methods as an individual User. • External Distributors should report each unique individual person who receives access through multiple devices as one User so long as each device is dedicated specifically to that individual. • If an External Distributor entitles one or more individuals to use the same device, the External Distributor should include only the individuals, and not the device, in the count. Each External Distributor will receive a credit against its monthly Distribution Fee for EDGA Summary Depth equal to the amount of its monthly Usage Fees up to a maximum of the Distribution Fee for EDGA Summary Depth. For example, an External Distributor will be subject to a $2,500 monthly Distribution Fee where they receive EDGA Summary Depth. If that External Distributor reports User quantities totaling $2,500 or more of monthly usage of EDGA 12 See Securities Exchange Act Release Nos. 74283 (February 18, 2015); 80 FR 9809 (February 24, 2015) (SR–EDGA–2015–09) (proposing fees for the Bats One Feed); 75395 (July 8, 2015), 80 FR 41126 (July 14, 2015) (SR–EDGA–2015–25) (proposing user fees for the EDGA Top and Last Sale data feeds); and 75787 (August 28, 2015), 80 FR 53370 (September 3, 2015) (SR–EDGA–2015–34) (proposing fees for EDGA Book Viewer). PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 893 Summary Depth, it will pay no net Distribution Fee, whereas if that same External Distributor were to report User quantities totaling $1,500 of monthly usage, it will pay a net of $1,000 for the Distribution Fee. External Distributors will remain subject to the per User fees discussed above. Enterprise Fee. The Exchange also proposes to establish a $20,000 per month Enterprise Fee that will permit a recipient firm who receives EDGA Summary Depth from an External Distributor to receive the data for an unlimited number of Professional and Non-Professional Users. For example, if a recipient firm had 15,000 Professional Users who each receive EDGA Summary Depth at $2.50 per month, then that recipient firm will pay $37,500 per month in Professional Users fees. Under the proposed Enterprise Fee, the recipient firm will pay a flat fee of $20,000 for an unlimited number of Professional and Non-Professional Users for EDGA Summary Depth. A recipient firm must pay a separate Enterprise Fee for each External Distributor that controls the display of EDGA Summary Depth if it wishes such User to be covered by an Enterprise Fee rather than by per User fees. A recipient firm that pays the Enterprise Fee will not have to report its number of such Users on a monthly basis. However, every six months, a recipient firm must provide the Exchange with a count of the total number of natural person users of each product, including both Professional and Non-Professional Users. Lastly, the proposed Enterprise Fee would be counted towards the Distribution Fee credit described above, under which an External Distributor receives a credit towards its Distribution Fee equal to the amount of its monthly EDGA Summary Depth User fees. Digital Media Enterprise Fee. The Exchange proposes to adopt a Digital Media Enterprise Fee of $5,000 per month for EDGA Summary Depth. As an alternative to proposed User fees discussed above, a recipient firm may purchase a monthly Digital Media Enterprise license to receive EDGA Summary Depth from an External Distributor to distribute to an unlimited number of Professional and NonProfessional Users for viewing via television, Web sites, and mobile devices for informational and nontrading purposes only without having to account for the extent of access to the data or the report the number of Users to the Exchange. Lastly, the proposed Digital Media Enterprise Fee would be counted towards the Distribution Fee credit described above, under which an External Distributor receives a credit E:\FR\FM\04JAN1.SGM 04JAN1 894 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices in place for other market data products offered by the Exchange.17 Enterprise Fee. The Exchange also proposes to establish a $25,000 per EDGA Depth month Enterprise Fee that will permit an Internal Distributor, External EDGA Depth is an uncompressed market data feed that provides depth-of- Distributor, or a recipient firm who receives EDGA Depth from an External book quotations and execution Distributor to receive the data for an information based on equity orders entered into the System.13 Currently, the unlimited number of Professional and Non-Professional Users. For example, if Exchange charges fees for both internal a recipient firm had 15,000 Professional and external distribution of EDGA Users who each receive EDGA Depth at Depth. The cost of EDGA Depth for an $10.00 per month, then that recipient Internal Distributor is currently $1,000 firm will pay $150,000 per month in per month. The Exchange also Professional Users fees. Under the separately charges an External proposed Enterprise Fee, the recipient Distributor of EDGA Depth a flat fee of firm will pay a flat fee of $25,000 for an $2,500 per month. The Exchange does unlimited number of Professional and not currently charge Internal and Non-Professional Users for EDGA External Distributors separate display Depth. Like proposed above for EDGA User fees. The Exchange also charges a fee for Non-Display Usage 14 by Trading Summary Depth, a recipient firm must pay a separate Enterprise Fee for each Platforms 15 by which subscribers to EDGA Depth are charged a fee of $2,000 External Distributor that controls the display of EDGA Depth if it wishes such per month. This fee is assessed in User to be covered by an Enterprise Fee addition to existing Distribution fees. rather than by per User fees. A recipient The Exchange now proposes to amend firm that pays the Enterprise Fee will its fee schedule to incorporate Usage not have to report its number of such Fees for both Professional and NonUsers on a monthly basis. However, Professional Users and an Enterprise every six months, a recipient firm must Fee for EDGA Depth. Each of these provide the Exchange with a count of changes are described in detail below. the total number of natural person users User Fees. The Exchange proposes to of each product, including both charge Internal and External Professional and Non-Professional Distributors that redistribute EDGA Users. Depth different fees for their Professional Users and Non-Professional Implementation Date Users.16 The Exchange will assess a The Exchange intends to implement monthly fee for Professional Users of the proposed fee change on January 3, $10.00 per User. Non-Professional Users 2017. will be assessed a monthly fee of $1.00 per User. Distributors that receive EDGA 2. Statutory Basis Depth will be required to count every The Exchange believes that the Professional User and Non-Professional proposed rule change is consistent with User to which they provide EDGA the objectives of Section 6 of the Act,18 Depth, the requirements for which are in general, and furthers the objectives of identical to that set forth above for Section 6(b)(4),19 in particular, as it is EDGA Summary Depth and as currently designed to provide for the equitable allocation of reasonable dues, fees and 13 See Exchange Rule 13.8(a). other charges among its members and 14 The term ‘‘Non-Display Usage’’ is defined as other recipients of Exchange data. The ‘‘any method of accessing a Market Data product Exchange believes that the proposed that involves access or use by a machine or automated device without access or use of a display rates are equitable and nonby a natural person or persons.’’ See the Exchange’s discriminatory in that they apply fee schedule available at https://www.bats.com/us/ uniformly to all recipients of Exchange equities/membership/fee_schedule/edga/. data. The Exchange believes the 15 The term ‘‘Trading Platform’’ is defined as ‘‘any proposed fees are competitive with execution platform operated as or by a registered those charged by other venues and, National Securities Exchange (as defined in Section 3(a)(1) of the Exchange Act), an Alternative Trading therefore, reasonable and equitably System (as defined in Rule 300(a) of Regulation allocated to recipients. The Exchange ATS), or an Electronic Communications Network also believes it is reasonable to charge (as defined in Rule 600(b)(23) of Regulation NMS).’’ different rates for EDGA Depth and See the Exchange’s fee schedule available at https:// www.bats.com/us/equities/membership/fee_ EDGA Summary Depth as both products schedule/edga/. different levels of content (e.g., EDGA 16 mstockstill on DSK3G9T082PROD with NOTICES towards its Distribution Fee equal to the amount of its monthly EDGA Summary Depth User fees. The Exchange notes that, unlike as proposed for EDGA Summary Depth described above, both Internal and External Distributors of EDGA Depth would be charged the same User fee for their Professional and Non-Professional Users. VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 supra note 12 and accompanying text. U.S.C. 78f. 19 15 U.S.C. 78f(b)(4). Depth contains quotations for all individual orders while EDGA Summary Depth contains the aggregation quotation information for all orders up to five (5) price levels). Lastly, the Exchange also believes that the proposed fees are reasonable and nondiscriminatory because they will apply uniformly to all recipients of Exchange data. The Exchange also believes that the proposed rule change is consistent with Section 11(A) of the Act 20 in that it supports (i) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets and (ii) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Furthermore, the proposed rule change is consistent with Rule 603 of Regulation NMS,21 which provides that any national securities exchange that distributes information with respect to quotations for or transactions in an NMS stock do so on terms that are not unreasonably discriminatory. In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data. In addition, the proposed fees would not permit unfair discrimination because all of the Exchange’s customers and market data vendors will be subject to the proposed fees on an equivalent basis. EDGA Summary Depth and EDGA Depth are distributed and purchased on a voluntary basis, in that neither the Exchange nor market data distributors are required by any rule or regulation to make this data available. Accordingly, Distributors and Users can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. Firms have a wide variety of alternative market data products from which to choose, such as similar proprietary data products offered by other exchanges and consolidated data. Moreover, the Exchange is not required to make any proprietary data products available or to offer any specific pricing alternatives to any customers. In addition, the fees that are the subject of this rule filing are constrained by competition. As explained below in 17 See 18 15 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 20 15 21 17 E:\FR\FM\04JAN1.SGM U.S.C. 78k–1. CFR 242.603. 04JAN1 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices the Exchange’s Statement on Burden on Competition, the existence of alternatives to EDGA Summary Depth and EDGA Depth further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives. That is, the Exchange competes with other exchanges (and their affiliates) that provide similar market data products. If another exchange (or its affiliate) were to charge less to distribute its similar product than the Exchange charges to consolidate and distribute EDGA Summary Depth and EDGA Depth, prospective Users likely would not subscribe to, or would cease subscribing to, EDGA Summary Depth and EDGA Depth. The Exchange notes that the Commission is not required to undertake a cost-of-service or ratemaking approach. The Exchange believes that, even if it were possible as a matter of economic theory, cost-based pricing for non-core market data would be so complicated that it could not be done practically.22 mstockstill on DSK3G9T082PROD with NOTICES EDGA Summary Depth Distribution Fee. The Exchange believes that the proposed Distribution Fees are also reasonable, equitably allocated, and not unreasonably discriminatory. The fees for Members and non-Members are uniform except 22 The Exchange believes that cost-based pricing would be impractical because it would create enormous administrative burdens for all parties, including the Commission, to cost-regulate a large number of participants and standardize and analyze extraordinary amounts of information, accounts, and reports. In addition, it is impossible to regulate market data prices in isolation from prices charged by markets for other services that are joint products. Cost-based rate regulation would also lead to litigation and may distort incentives, including those to minimize costs and to innovate, leading to further waste. Under cost-based pricing, the Commission would be burdened with determining a fair rate of return, and the industry could experience frequent rate increases based on escalating expense levels. Even in industries historically subject to utility regulation, cost-based ratemaking has been discredited. As such, the Exchange believes that cost-based ratemaking would be inappropriate for proprietary market data and inconsistent with Congress’s direction that the Commission use its authority to foster the development of the national market system, and that market forces will continue to provide appropriate pricing discipline. See Appendix C to NYSE’s comments to the Commission’s 2000 Concept Release on the Regulation of Market Information Fees and Revenues, which can be found on the Commission’s Web site at https:// www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 (December 17, 2014) (SR–NYSE–2014–64) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Establish an Access Fee for the NYSE Best Quote and Trades Data Feed, Operative December 1, 2014). VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 with respect to reasonable distinctions with respect to internal and external distribution. The Exchange believes that the Distribution Fees for EDGA Summary Depth are reasonable and fair in light of alternatives offered by other market centers. For example, EDGA Summary Depth provides investors with alternative market data and competes with similar market data product currently offered by the New York Stock Exchange, Inc. (‘‘NYSE’’) and the Nasdaq Stock Market LLC (‘‘Nasdaq’’).23 Specifically, the NYSE charges an access fee of $5,000 per month for NYSE OpenBook, Aggregated24 which is more than the External Distribution fee proposed herein for EDGA Summary Depth. User Fees. The Exchange believes that implementing the Professional and NonProfessional User fees for EDGA Summary Depth are equitable and reasonable because they will result in greater availability to Professional and Non-Professional Users. Moreover, introducing a modest Non-Professional User fee for EDGA Summary Depth is reasonable because it provides an additional method for retail investors to access EDGA Summary Depth data by providing the same data that is available to Professional Users. The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to recipient firms and Users. The fee structure of differentiated Professional and NonProfessional fees is utilized by the Exchange for the Bats One Feed and has long been used by other exchanges for their proprietary data products, and by the Nasdaq UTP and the CTA and CQ Plans in order to reduce the price of data to retail investors and make it more broadly available.25 Offering EDGA 23 See Nasdaq Rule 7023(a)(1)(C) (describing Nasdaq TotalView is a depth-of-book data feed that includes all orders and quotes from all Nasdaq members displayed in the Nasdaq Market Center as well as the aggregate size of such orders and quotes at each price level in the execution functionality of the Nasdaq Market Center). See also Nasdaq Book Viewer, a description of which is available at https://data.nasdaq.com/Book Viewer.aspx. See NYSE OpenBook available at https:// www.nyxdata.com/openbook (providing real-time view of the NYSE limit order book). 24 See NYSE Market Data Pricing dated November 2016 available at https://www.nyxdata.com/. Nasdaq charges distribution fees ranging from $375 for 1–39 subscribers to $75,000 for more than 250 subscribers. See Nasdaq Rule 7023(b)(4). 25 See Securities Exchange Act Release Nos. 74285 (February 18, 2015), 80 FR 9828 (February 24, 2015) (SR–BATS–2015–11); 74283 (February 18, 2015), 80 FR 9809 (February 24, 2015) (SR–EDGA– 2015–09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR–EDGX–2015–09); and 74284 (February 18, 2015), 80 FR 9792 (February 24, 2015) (SR–EDGA–2015–09) (‘‘Initial BATS One PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 895 Summary Depth to Non-Professional Users with the same data available to Professional Users results in greater equity among data recipients. In addition, the proposed fees are reasonable when compared to similar fees for comparable products offered by the NYSE and Nasdaq. Specifically, NYSE offers NYSE OpenBook for a monthly fee of $60.00 per professional subscriber and $15 per non-professional subscriber.26 Nasdaq offers Nasdaq TotalView-Aggregated for a monthly fee of $70.00 per professional subscriber and $14 per non-professional subscriber.27 The Exchange’s proposed per User Fees for EDGA Summary Depth are less than the NYSE and Nasdaq fees. Enterprise Fee. The proposed Enterprise Fee for EDGA Summary Depth is equitable and reasonable as the fees proposed are less than the enterprise fees currently charged for Nasdaq TotalView-Aggregated. Nasdaq charges an enterprise fee of $100,000 per month for Nasdaq TotalViewAggregated,28 which is far greater than the proposed Enterprise Fee of $20,000 per month for EDGA Summary Depth. In addition, the Enterprise Fee proposed by the Exchange could result in a fee reduction for recipient firms with a large number of Professional and NonProfessional Users. If a recipient firm has a smaller number of Professional Users of EDGA Summary Depth, then it may continue using the per User structure and benefit from the per User Fee reductions. By reducing prices for recipient firms with a large number of Professional and Non-Professional Users, the Exchange believes that more firms may choose to receive and to distribute EDGA Summary Depth, thereby expanding the distribution of this market data for the benefit of investors. The Exchange further believes that the proposed Enterprise Fee is reasonable because it will simplify reporting for certain recipients that have large numbers of Professional and NonProfessional Users. Firms that pay the Feed Fee Filings’’). See also, e.g., Securities Exchange Act Release No. 20002, File No. S7–433 (July 22, 1983) (establishing nonprofessional fees for CTA data); and Nasdaq Rules 7023(b), 7047. 26 See NYSE Market Data Pricing dated November 2016 available at https://www.nyxdata.com/. 27 See Nasdaq Rule 7023(b)(2). 28 See Nasdaq Rule 7023(c)(2) (stating that a distributor that is also a broker-dealer pays a monthly fee of $100,000 for the right to provide Nasdaq TotalView and for display usage for internal distribution, or for external distribution to both professional and non-professional subscribers with whom the firm has a brokerage relationship.) Nasdaq also charges an enterprise fee of $25,000 to provide Nasdaq TotalView to an unlimited number of non-professional subscribers only. See Nasdaq Rule 7023(c)(1). E:\FR\FM\04JAN1.SGM 04JAN1 mstockstill on DSK3G9T082PROD with NOTICES 896 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices proposed Enterprise Fee will not have to report the number of Users on a monthly basis as they currently do, but rather will only have to count natural person users every six months, which is a significant reduction in administrative burden. Finally, the Exchange believes that it is equitable and not unfairly discriminatory to establish an Enterprise Fee because it reduces the Exchange’s costs and the Distributor’s administrative burdens in tracking and auditing large numbers of Users. Digital Media Enterprise Fee. The Exchange believes that the proposed Digital Media Enterprise Fee for EDGA Summary Depth provides for an equitable allocation of reasonable fees among recipients of the data and is not designed to permit unfair discrimination among customers, brokers, or dealers. In establishing the Digital Media Enterprise Fee, the Exchange recognizes that there is demand for a more seamless and easierto-administer data distribution model that takes into account the expanded variety of media and communication devices that investors utilize today. The Exchange believes the Digital Media Enterprise Fee will be easy to administer because data recipients that purchase it would not be required to differentiate between Professional and Non-Professional Users, account for the extent of access to the data, or report the number of Users. This is a significant reduction on a recipient firm’s administrative burdens and is a significant value to investors. For example, a television broadcaster could display EDGA Summary Depth data during market-related programming and on its Web site or allow viewers to view the data via their mobile devices, creating a more seamless distribution model that will allow investors more choice in how they receive and view market data, all without having to account for and/or measure who accesses the data and how often they do so. The proposed Digital Media Enterprise Fee is equitable and reasonable because it will also enable recipient firms to more widely distribute data from EDGA Summary Depth to investors for informational purposes at a lower cost than is available today. For example, a recipient firm may purchase an Enterprise license in the amount of $20,000 per month for to receive EDGA Summary Depth from an External Distributor for an unlimited number of Professional and NonProfessional Users, which is greater than the proposed Digital Media Enterprise Fee. The Exchange also believes the amount of the Digital Media Enterprise VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 Fee is reasonable as compared to the existing enterprise fees discussed above because the distribution of EDGA Summary Depth data is limited to television, Web sites, and mobile devices for informational purposes only, while distribution of EDGA Summary Depth data pursuant to an Enterprise license contains no such limitation. The Exchange also believes that the proposed Digital Media Enterprise Fee is equitable and reasonable because it is less than similar fees charged by other exchanges.29 EDGA Depth User Fees. The Exchange believes that implementing the Professional and NonProfessional User fees for EDGA Depth are equitable and reasonable because they will result in greater availability to Professional and Non-Professional Users. Moreover, introducing a modest Non-Professional User fee for EDGA Depth is reasonable because it provides an additional method for retail investors to access EDGA Depth data by providing the same data that is available to Professional Users. The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to recipient firms and Users. The fee structure of differentiated Professional and NonProfessional fees is utilized by the Exchange and has long been used by other exchanges for their proprietary data products, and by the Nasdaq UTP and the CTA and CQ Plans in order to reduce the price of data to retail investors and make it more broadly available.30 Offering EDGA Depth to Non-Professional Users with the same data available to Professional Users results in greater equity among data recipients. The Exchange also believes it is equitable, reasonable, and not unfairly discriminatory to charge User fees to Internal Distributors, as such fees are currently charged by NYSE and Nasdaq.31 In addition, the proposed fees are reasonable when compared to similar fees for comparable products offered by the NYSE and Nasdaq. Specifically, NYSE offers NYSE OpenBook Ultra for 29 Nasdaq offers proprietary data products for distribution over the internet and television under alternative fee schedules that are subject to maximum fee of $50,000 [sic] per month. See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise fee of $40,000 per month for the NYSE Trade Digital Media product. See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR 20983 (April 8, 2013) (SR–NYSE–2013–23). 30 See supra note 24. 31 See supra notes 24 and 25 (not limiting the application of user fees to external distribution only). PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 a monthly fee of $60.00 per professional subscriber and $15 per non-professional subscriber.32 Nasdaq offers Nasdaq TotalView-ITCH for a monthly fee of $70.00 per professional subscriber and $14 per non-professional subscriber.33 The Exchange’s proposed per User Fees for EDGA Depth are less than the NYSE and Nasdaq fees. Enterprise Fee. The proposed Enterprise Fee for EDGA Depth is equitable and reasonable as compared to the enterprise fees currently charged for Nasdaq TotalView-ITCH. Nasdaq charges an enterprise fee of $100,000 per month for Nasdaq TotalViewITCH,34 which is greater than the proposed Enterprise Fee of $25,000 per month for EDGA Depth. In addition, the Enterprise Fee proposed by the Exchange could result in a fee reduction for recipient firms with a large number of Professional and Non-Professional Users. If a recipient firm has a smaller number of Professional Users of EDGA Depth, then it may continue using the per User structure and benefit from the per User Fee reductions. By reducing prices for recipient firms with a large number of Professional and NonProfessional Users, the Exchange believes that more firms may choose to receive and to distribute EDGA Depth, thereby expanding the distribution of this market data for the benefit of investors. The Exchange further believes that the proposed Enterprise Fee is reasonable because it will simplify reporting for certain recipients that have large numbers of Professional and NonProfessional Users. Firms that pay the proposed Enterprise Fee will not have to report the number of Users on a monthly basis as they currently do, but rather will only have to count natural person users every six months, which is a significant reduction in administrative burden. Finally, the Exchange believes that it is equitable and not unfairly discriminatory to establish an Enterprise Fee because it reduces the Exchange’s costs and the Distributor’s administrative burdens in tracking and auditing large numbers of Users. 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. The Exchange’s ability to price EDGA Depth and EDGA Summary Depth is 32 See supra note 25. supra note 26. 34 See supra note 27. 33 See E:\FR\FM\04JAN1.SGM 04JAN1 mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices constrained by: (i) Competition among exchanges, other trading platforms, and Trade Reporting Facilities (‘‘TRF’’) that compete with each other in a variety of dimensions; (ii) the existence of inexpensive real-time consolidated data and market-specific data and free delayed data; and (iii) the inherent contestability of the market for proprietary data. The Exchange and its market data products are subject to significant competitive forces and the proposed fees represent responses to that competition. To start, the Exchange competes intensely for order flow. It competes with the other national securities exchanges that currently trade equities, with electronic communication networks, with quotes posted in FINRA’s Alternative Display Facility, with alternative trading systems, and with securities firms that primarily trade as principal with their customer order flow. In addition, EDGA Summary Depth and EDGA Depth compete with a number of alternative products. For instance, EDGA Summary Depth and EDGA Depth do provide a complete picture of all trading activity in a security. Rather, the other national securities exchanges, the several TRFs of FINRA, and Electronic Communication Networks (‘‘ECN’’) that produce proprietary data all produce trades and trade reports. Each is currently permitted to produce last sale information products, and many currently do, including Nasdaq and NYSE. In addition, market participants can gain access to EDGA last sale and depth-of-book quotations, though integrated with the prices of other markets, on feeds made available through the SIPs. In sum, the availability of a variety of alternative sources of information imposes significant competitive pressures on Exchange data products and the Exchange’s compelling need to attract order flow imposes significant competitive pressure on the Exchange to act equitably, fairly, and reasonably in setting the proposed data product fees. The proposed data product fees are, in part, responses to that pressure. The Exchange believes that the proposed fees would reflect an equitable allocation of its overall costs to users of its facilities. In addition, when establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to VerDate Sep<11>2014 16:46 Jan 03, 2017 Jkt 241001 establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all Users. The existence of alternatives to EDGA Depth and EDGA Summary Depth, including existing similar feeds by other exchanges, consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if its cost to purchase is not justified by the returns any particular vendor or subscriber would achieve through the purchase. Lastly, the Exchange represents that the increase in pricing of EDGA Depth and the proposed pricing of the EDGA Summary Feed would continue to enable a competing vendor to create a competing product to the Exchange’s Bats One Feed on the same price and latency basis as the Exchange. The Bats One Feed is a data feed that disseminates, on a real-time basis, the aggregate BBO of all displayed orders for securities traded on each of the Bats Exchanges and for the Bats Exchanges report quotes under the CTA Plan or the Nasdaq/UTP Plan. The Bats One Feed also contains the individual last sale information for the Bats Exchanges (collectively with the aggregate BBO, the ‘‘Bats One Summary Feed’’). In addition, the Bats One Feed contains optional functionality which enables recipients to receive aggregated twosided quotations from the Bats Exchanges for up to five (5) price levels (‘‘Bats One Premium Feed’’).35 The Exchange uses the following data feeds to create the Bats One Feed, each of which are available to vendors: EDGX Depth, EDGA Depth, BYX Depth, and the BZX Depth. When adopting the Bats One Feed, the Exchange represented that a vendor could create a competing product based in the data feed used to construct the Bats One Feed on the same cost and latency basis as the Exchange.36 Therefore, the Exchange designed the pricing of these products so that their aggregate cost is not greater than the Bats One Feed, thereby enabling a vendor to create a competing product to 35 See Exchange Rule 13.8(b). See also Securities Exchange Act Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31, 2014) (File Nos. SR–EDGX–2014–25; SR–EDGA–2014–25; SR– BATS–2014–055; SR–BYX–2014–030) (Notice of Amendments No. 2 and Order Granting Accelerated Approval to Proposed Rule Changes, as Modified by Amendments Nos. 1 and 2, to Establish a New Market Data Product called the Bats One Feed) (‘‘Bats One Approval Order’’). 36 Id. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 897 the Bats One Feed on the same cost basis as the Exchange. However, the Exchange now proposes to increase the cost of EDGA Depth, which when combined with the proposed increases by its affiliates for their depth products, would cause their aggregate cost to be higher than the Bats One Premium Feed.37 However, to ensure that a vendor could continue to create a competing product to the Bats One Premium Feed at no greater cost, that vendor could now utilize EDGA Summary Depth, as well as the Summary Depth feeds of BZX, BYX, and EDGX to create a competing product to the Bats One Premium Feed for less cost and on the same latency basis as the Exchange.38 The Exchange has designed the content and pricing of EDGA Summary Depth, and related products by its affiliates, so that a vendor could utilize those feeds, in lieu of the Bats Exchange’s existing depth-of-book products, to construct a competing product on the same cost and latency basis as the Exchange. The pricing the Exchange and its affiliates propose to charge for Summary Depth feeds would be lower than the cost to obtain the Bats One Premium Feed.39 Such pricing would continue to enable a vendor to receive each of the Bats Exchange’s Summary Depth feeds and offer a similar product to the Bats One Premium Feed on a competitive basis and at no greater cost than the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. 37 The Exchange notes that a vendor seeking to create a product to compete with the Bats One Summary Feed may continue to utilize each of the Bats Exchange’s Top and Last Sale data feeds, the aggregate cost of which is less than the Bats One Summary Feed. 38 While the proposed EDGA Summary Depth feed does not contain the symbol summary or consolidated volume data included in the Bats One Feed, a vendor could include this information in a competing product as this information is easily derivable from the proposed feeds or can be obtained from the securities information processors on the same terms as the Exchange. 39 While the aggregate cost of each of the Bats Exchange’s Summary Depth Products equals the cost of the Bats One Premium Feed, the cost of the Bats One Feed continues to be greater because subscribers are required to pay an additional $1,000 aggregation fee. See the Exchange’s fee schedule available at https://www.bats.com/us/equities/ membership/fee_schedule/edga/. E:\FR\FM\04JAN1.SGM 04JAN1 898 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices 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 40 and paragraph (f) of Rule 19b–4 thereunder.41 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: mstockstill on DSK3G9T082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– BatsEDGA–2016–32 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BatsEDGA–2016–32. 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 also will be available for 40 15 41 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). VerDate Sep<11>2014 16:46 Jan 03, 2017 inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– BatsEDGA–2016–32 and should be submitted on or before January 25, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.42 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016–31859 Filed 1–3–17; 8:45 am] BILLING CODE 8011–01–P SUSQUEHANNA RIVER BASIN COMMISSION Public Hearing Susquehanna River Basin Commission. ACTION: Notice. AGENCY: The Susquehanna River Basin Commission will hold a public hearing on February 2, 2017, in Harrisburg, Pennsylvania. At this public hearing, the Commission will hear testimony on the projects listed in the Supplementary Information section of this notice. Such projects are intended to be scheduled for Commission action at its next business meeting, tentatively scheduled for March 9, 2017, which will be noticed separately. The public should take note that this public hearing will be the only opportunity to offer oral comment to the Commission for the listed projects. The deadline for the submission of written comments is February 13, 2017. DATES: The public hearing will convene on February 2, 2017, at 2:30 p.m. The public hearing will end at 5:00 p.m. or at the conclusion of public testimony, whichever is sooner. The deadline for the submission of written comments is February 13, 2017. ADDRESSES: The public hearing will be conducted at the Pennsylvania State Capitol, Room 8E–B, East Wing, Commonwealth Avenue, Harrisburg, Pa. FOR FURTHER INFORMATION CONTACT: Jason Oyler, General Counsel, telephone: (717) 238–0423, ext. 1312; fax: (717) 238–2436. Information concerning the applications for these projects is available at the SRBC Water Resource Portal at www.srbc.net/wrp. Additional SUMMARY: 42 17 Jkt 241001 PO 00000 CFR 200.30–3(a)(12). Frm 00084 Fmt 4703 Sfmt 4703 supporting documents are available to inspect and copy in accordance with the Commission’s Access to Records Policy at www.srbc.net/pubinfo/docs/2009-02_ Access_to_Records_Policy_ 20140115.pdf. The public hearing will cover the following projects: SUPPLEMENTARY INFORMATION: Projects Scheduled for Action 1. Project Sponsor and Facility: Anadarko E&P Onshore LLC (West Branch Susquehanna River), Nippenose Township, Lycoming County, Pa. Application for renewal of surface water withdrawal of up to 0.720 mgd (peak day) (Docket No. 20130301). 2. Project Sponsor and Facility: Cabot Oil & Gas Corporation (Meshoppen Creek), Lemon Township, Wyoming County, Pa. Application for renewal of surface water withdrawal of up to 0.500 mgd (peak day) (Docket No. 20121202). 3. Project Sponsor and Facility: Crossgates Golf Course, Manor Township and Millersville Borough, Lancaster County, Pa. Application for renewal of consumptive water use of up to 0.300 mgd (peak day) (Docket No. 19910515). 4. Project Sponsor and Facility: Crossgates Golf Course (Conestoga River), Manor Township and Millersville Borough, Lancaster County, Pa. Application for renewal of surface water withdrawal of up to 0.300 mgd (peak day) (Docket No. 19910515). 5. Project Sponsor and Facility: DS Services of America, Inc., Clay Township, Lancaster County, Pa. Application for groundwater withdrawal of up to 0.028 mgd (30-day average) from existing Well 4. 6. Project Sponsor and Facility: DS Services of America, Inc., Clay Township, Lancaster County, Pa. Application for groundwater withdrawal of up to 0.042 mgd (30-day average) from existing Well 5. 7. Project Sponsor: King Valley Golf Club, Inc. Project Facility: King Valley Golf Course (Boiling Springs Run), Kimmel Township, Bedford County, Pa. Application for surface water withdrawal of up to 0.090 mgd (peak day). 8. Project Sponsor: King Valley Golf Club, Inc. Project Facility: King Valley Golf Course, Kimmel Township, Bedford County, Pa. Application for consumptive water use of up to 0.090 mgd (peak day). 9. Project Sponsor and Facility: Mount Joy Borough Authority, Mount Joy Borough, Lancaster County, Pa. Application for modification to request a reduction of the maximum E:\FR\FM\04JAN1.SGM 04JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 2 (Wednesday, January 4, 2017)]
[Notices]
[Pages 892-898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31859]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79699; File No. SR-BatsEDGA-2016-32]

Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Market Data Section of Its Fee Schedule To Adopt Fees for
EDGA Summary Depth and Amend Fees for EDGA Depth

December 28, 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 December 15, 2016, Bats EDGA Exchange, Inc. (``EDGA'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 Market Data section of
its fee schedule to: (i) Adopt fees for a new market data product
called EDGA Summary Depth; and (ii) amend the fees for EDGA Depth.
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 the Market Data section of its fee
schedule to: (i) Adopt fees for a new market data product called EDGA
Summary Depth; and (ii) amend the fees for EDGA Depth.
EDGA Summary Depth
EDGA Summary Depth is a data feed that will provide aggregated two-
sided quotations for all displayed orders entered into the System \5\
for up to five (5) price levels for securities traded on the Exchange
and for which the Exchange reports quotes under the Consolidated Tape
Association (``CTA'') Plan or the Nasdaq/UTP Plan.\6\ EDGA Summary
Depth will also contain the individual last sale information, Market
Status, Trading Status, and Trade Break messages. The individual last
sale information will include the price, size, and time of execution.
The last sale message will also include the cumulative number of shares
executed on the Exchange for that trading day. The Exchange intends to
begin to offer EDGA Summary Depth on January 3, 2017.\7\
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\5\ ``System'' is defined as the ``the electronic communications
and trading facility designated by the Board through which
securities orders of Users Are consolidated for ranking, execution
and, when applicable, routing away.'' See Exchange Rule 1.5(cc).
\6\ See Exchange Rule 13.8(f).
\7\ See Reminder: Bats Global Markets to Introduce Bats Summary
Depth Feeds on January 3, 2017, https://cdn.batstrading.com/resources/release_notes/2017/Reminder-Bats-Global-Markets-to-Introduce-Bats-Summary-Depth-Feeds-on-Jan-3-2017.pdf.
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The Exchange now proposes to amend its fee schedule to incorporate
fees for distribution of EDGA Summary Depth to subscribers.\8\ The
proposed fees include

[[Page 893]]

the following, each of which are described in detail below: (i)
Distribution Fees for both Internal and External Distributors; \9\ (ii)
Usage Fees for both Professional \10\ and Non-Professional \11\ Users;
(iii) an Enterprise Fee; and (iv) a Digital Media Enterprise Fee.
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\8\ The Exchange notes that its affiliated exchanges, Bats EDGX
Exchange, Inc. (``EDGX''), Bats BZX Exchange, Inc. (``BZX'') and
Bats BYX Exchange, Inc. (``BYX'', together with the Exchange, EDGX
and BZX, the ``Bats Exchanges''), also intent to file proposed rule
changes with Commission to adopt similar fees for their respective
Summary Depth market data product.
\9\ A ``Distributor'' is defined as ``any entity that receives
the Exchange Market Data product directly from the Exchange or
indirectly through another entity and then distributes it internally
or externally to a third party.'' See the Exchange's fee schedule
available at https://www.bats.com/us/equities/membership/fee_schedule/edga/. An ``Internal Distributor'' is defined as ``a
Distributor that receives the Exchange Market Data product and then
distributes that data to one or more Users within the Distributor's
own entity.'' Id. An ``External Distributor'' is defined as ``a
Distributor that receives the Exchange Market Data product and then
distributes that data to a third party or one or more Users outside
the Distributor's own entity.'' Id.''
\10\ A ``Professional User'' is defined as ``any User other than
a Non-Professional User.'' See the Exchange's fee schedule available
at https://www.bats.com/us/equities/membership/fee_schedule/edga/.
\11\ A ``Non-Professional User'' is defined as ``a natural
person who is not: (i) Registered or qualified in any capacity with
the Commission, the Commodity Futures Trading Commission, any state
securities agency, any securities exchange or association, or any
commodities or futures contract market or association; (ii) engaged
as an ``investment adviser'' as that term is defined in Section
202(a)(11) of the Investment Advisers Act of 1940 (whether or not
registered or qualified under that Act); or (iii) employed by a bank
or other organization exempt from registration under federal or
state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt.'' Id.
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Distribution Fees. As proposed, each Internal Distributor that
receives EDGA Summary Depth shall pay a fee of $2,500 per month. The
Exchange does not propose to charge any User fees for EDGA Summary
Depth where the data is received and subsequently internally
distributed to Professional or Non-Professional Users. In addition, the
Exchange proposes to charge also External Distributors that receive
EDGA Summary Depth a fee of $2,500 per month.
User Fees. The Exchange proposes to charge External Distributors
that redistribute EDGA Summary Depth different fees for their
Professional Users and Non-Professional Users. The Exchange will assess
a monthly fee for Professional Users of $2.50 per User. Non-
Professional Users will be assessed a monthly fee of $0.10 per User.
The Exchange does not propose to charge per User fees to Internal
Distributors.
External Distributors that receive EDGA Summary Depth will be
required to count every Professional User and Non-Professional User to
which they provide EDGA Summary Depth, the requirements for which are
identical to that currently in place for other market data products
offered by the Exchange.\12\ Thus, the External Distributor's count
will include every person and device that accesses the data regardless
of the purpose for which the individual or device uses the data.
External Distributors must report all Professional and Non-Professional
Users in accordance with the following:
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\12\ See Securities Exchange Act Release Nos. 74283 (February
18, 2015); 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-09)
(proposing fees for the Bats One Feed); 75395 (July 8, 2015), 80 FR
41126 (July 14, 2015) (SR-EDGA-2015-25) (proposing user fees for the
EDGA Top and Last Sale data feeds); and 75787 (August 28, 2015), 80
FR 53370 (September 3, 2015) (SR-EDGA-2015-34) (proposing fees for
EDGA Book Viewer).
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In connection with an External Distributor's distribution
of EDGA Summary Depth, the Distributor should count as one User each
unique User that the Distributor has entitled to have access to EDGA
Summary Depth. However, where a device is dedicated specifically to a
single individual, the Distributor should count only the individual and
need not count the device.
The External Distributor should identify and report each
unique User. If a User uses the same unique method to gain access to
EDGA Summary Depth, the Distributor should count that as one User.
However, if a unique User uses multiple methods to gain access to EDGA
Summary Depth (e.g., a single User has multiple passwords and user
identifications), the External Distributor should report all of those
methods as an individual User.
External Distributors should report each unique individual
person who receives access through multiple devices as one User so long
as each device is dedicated specifically to that individual.
If an External Distributor entitles one or more
individuals to use the same device, the External Distributor should
include only the individuals, and not the device, in the count.
Each External Distributor will receive a credit against its monthly
Distribution Fee for EDGA Summary Depth equal to the amount of its
monthly Usage Fees up to a maximum of the Distribution Fee for EDGA
Summary Depth. For example, an External Distributor will be subject to
a $2,500 monthly Distribution Fee where they receive EDGA Summary
Depth. If that External Distributor reports User quantities totaling
$2,500 or more of monthly usage of EDGA Summary Depth, it will pay no
net Distribution Fee, whereas if that same External Distributor were to
report User quantities totaling $1,500 of monthly usage, it will pay a
net of $1,000 for the Distribution Fee. External Distributors will
remain subject to the per User fees discussed above.
Enterprise Fee. The Exchange also proposes to establish a $20,000
per month Enterprise Fee that will permit a recipient firm who receives
EDGA Summary Depth from an External Distributor to receive the data for
an unlimited number of Professional and Non-Professional Users. For
example, if a recipient firm had 15,000 Professional Users who each
receive EDGA Summary Depth at $2.50 per month, then that recipient firm
will pay $37,500 per month in Professional Users fees. Under the
proposed Enterprise Fee, the recipient firm will pay a flat fee of
$20,000 for an unlimited number of Professional and Non-Professional
Users for EDGA Summary Depth. A recipient firm must pay a separate
Enterprise Fee for each External Distributor that controls the display
of EDGA Summary Depth if it wishes such User to be covered by an
Enterprise Fee rather than by per User fees. A recipient firm that pays
the Enterprise Fee will not have to report its number of such Users on
a monthly basis. However, every six months, a recipient firm must
provide the Exchange with a count of the total number of natural person
users of each product, including both Professional and Non-Professional
Users. Lastly, the proposed Enterprise Fee would be counted towards the
Distribution Fee credit described above, under which an External
Distributor receives a credit towards its Distribution Fee equal to the
amount of its monthly EDGA Summary Depth User fees.
Digital Media Enterprise Fee. The Exchange proposes to adopt a
Digital Media Enterprise Fee of $5,000 per month for EDGA Summary
Depth. As an alternative to proposed User fees discussed above, a
recipient firm may purchase a monthly Digital Media Enterprise license
to receive EDGA Summary Depth from an External Distributor to
distribute to an unlimited number of Professional and Non-Professional
Users for viewing via television, Web sites, and mobile devices for
informational and non-trading purposes only without having to account
for the extent of access to the data or the report the number of Users
to the Exchange. Lastly, the proposed Digital Media Enterprise Fee
would be counted towards the Distribution Fee credit described above,
under which an External Distributor receives a credit

[[Page 894]]

towards its Distribution Fee equal to the amount of its monthly EDGA
Summary Depth User fees.
EDGA Depth
EDGA Depth is an uncompressed market data feed that provides depth-
of-book quotations and execution information based on equity orders
entered into the System.\13\ Currently, the Exchange charges fees for
both internal and external distribution of EDGA Depth. The cost of EDGA
Depth for an Internal Distributor is currently $1,000 per month. The
Exchange also separately charges an External Distributor of EDGA Depth
a flat fee of $2,500 per month. The Exchange does not currently charge
Internal and External Distributors separate display User fees. The
Exchange also charges a fee for Non-Display Usage \14\ by Trading
Platforms \15\ by which subscribers to EDGA Depth are charged a fee of
$2,000 per month. This fee is assessed in addition to existing
Distribution fees. The Exchange now proposes to amend its fee schedule
to incorporate Usage Fees for both Professional and Non-Professional
Users and an Enterprise Fee for EDGA Depth. Each of these changes are
described in detail below.
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\13\ See Exchange Rule 13.8(a).
\14\ The term ``Non-Display Usage'' is defined as ``any method
of accessing a Market Data product that involves access or use by a
machine or automated device without access or use of a display by a
natural person or persons.'' See the Exchange's fee schedule
available at https://www.bats.com/us/equities/membership/fee_schedule/edga/.
\15\ The term ``Trading Platform'' is defined as ``any execution
platform operated as or by a registered National Securities Exchange
(as defined in Section 3(a)(1) of the Exchange Act), an Alternative
Trading System (as defined in Rule 300(a) of Regulation ATS), or an
Electronic Communications Network (as defined in Rule 600(b)(23) of
Regulation NMS).'' See the Exchange's fee schedule available at
https://www.bats.com/us/equities/membership/fee_schedule/edga/.
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User Fees. The Exchange proposes to charge Internal and External
Distributors that redistribute EDGA Depth different fees for their
Professional Users and Non-Professional Users.\16\ The Exchange will
assess a monthly fee for Professional Users of $10.00 per User. Non-
Professional Users will be assessed a monthly fee of $1.00 per User.
Distributors that receive EDGA Depth will be required to count every
Professional User and Non-Professional User to which they provide EDGA
Depth, the requirements for which are identical to that set forth above
for EDGA Summary Depth and as currently in place for other market data
products offered by the Exchange.\17\
---------------------------------------------------------------------------

\16\ The Exchange notes that, unlike as proposed for EDGA
Summary Depth described above, both Internal and External
Distributors of EDGA Depth would be charged the same User fee for
their Professional and Non-Professional Users.
\17\ See supra note 12 and accompanying text.
---------------------------------------------------------------------------

Enterprise Fee. The Exchange also proposes to establish a $25,000
per month Enterprise Fee that will permit an Internal Distributor,
External Distributor, or a recipient firm who receives EDGA Depth from
an External Distributor to receive the data for an unlimited number of
Professional and Non-Professional Users. For example, if a recipient
firm had 15,000 Professional Users who each receive EDGA Depth at
$10.00 per month, then that recipient firm will pay $150,000 per month
in Professional Users fees. Under the proposed Enterprise Fee, the
recipient firm will pay a flat fee of $25,000 for an unlimited number
of Professional and Non-Professional Users for EDGA Depth. Like
proposed above for EDGA Summary Depth, a recipient firm must pay a
separate Enterprise Fee for each External Distributor that controls the
display of EDGA Depth if it wishes such User to be covered by an
Enterprise Fee rather than by per User fees. A recipient firm that pays
the Enterprise Fee will not have to report its number of such Users on
a monthly basis. However, every six months, a recipient firm must
provide the Exchange with a count of the total number of natural person
users of each product, including both Professional and Non-Professional
Users.
Implementation Date
The Exchange intends to implement the proposed fee change on
January 3, 2017.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\18\ in general, and
furthers the objectives of Section 6(b)(4),\19\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data. The Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply uniformly to all
recipients of Exchange data. The Exchange believes the proposed fees
are competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to recipients. The Exchange also
believes it is reasonable to charge different rates for EDGA Depth and
EDGA Summary Depth as both products different levels of content (e.g.,
EDGA Depth contains quotations for all individual orders while EDGA
Summary Depth contains the aggregation quotation information for all
orders up to five (5) price levels). Lastly, the Exchange also believes
that the proposed fees are reasonable and non-discriminatory because
they will apply uniformly to all recipients of Exchange data.
---------------------------------------------------------------------------

\18\ 15 U.S.C. 78f.
\19\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \20\ in that it supports (i)
fair competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.
Furthermore, the proposed rule change is consistent with Rule 603 of
Regulation NMS,\21\ which provides that any national securities
exchange that distributes information with respect to quotations for or
transactions in an NMS stock do so on terms that are not unreasonably
discriminatory. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
---------------------------------------------------------------------------

\20\ 15 U.S.C. 78k-1.
\21\ 17 CFR 242.603.
---------------------------------------------------------------------------

In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors will be subject to the proposed fees on an equivalent basis.
EDGA Summary Depth and EDGA Depth are distributed and purchased on a
voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. Firms have a wide variety of
alternative market data products from which to choose, such as similar
proprietary data products offered by other exchanges and consolidated
data. Moreover, the Exchange is not required to make any proprietary
data products available or to offer any specific pricing alternatives
to any customers.
In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in

[[Page 895]]

the Exchange's Statement on Burden on Competition, the existence of
alternatives to EDGA Summary Depth and EDGA Depth further ensures that
the Exchange cannot set unreasonable fees, or fees that are
unreasonably discriminatory, when vendors and subscribers can elect
such alternatives. That is, the Exchange competes with other exchanges
(and their affiliates) that provide similar market data products. If
another exchange (or its affiliate) were to charge less to distribute
its similar product than the Exchange charges to consolidate and
distribute EDGA Summary Depth and EDGA Depth, prospective Users likely
would not subscribe to, or would cease subscribing to, EDGA Summary
Depth and EDGA Depth.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or rate-making approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\22\
---------------------------------------------------------------------------

\22\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's Web site at https://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).
---------------------------------------------------------------------------

EDGA Summary Depth
Distribution Fee. The Exchange believes that the proposed
Distribution Fees are also reasonable, equitably allocated, and not
unreasonably discriminatory. The fees for Members and non-Members are
uniform except with respect to reasonable distinctions with respect to
internal and external distribution. The Exchange believes that the
Distribution Fees for EDGA Summary Depth are reasonable and fair in
light of alternatives offered by other market centers. For example,
EDGA Summary Depth provides investors with alternative market data and
competes with similar market data product currently offered by the New
York Stock Exchange, Inc. (``NYSE'') and the Nasdaq Stock Market LLC
(``Nasdaq'').\23\ Specifically, the NYSE charges an access fee of
$5,000 per month for NYSE OpenBook, Aggregated\24\ which is more than
the External Distribution fee proposed herein for EDGA Summary Depth.
---------------------------------------------------------------------------

\23\ See Nasdaq Rule 7023(a)(1)(C) (describing Nasdaq TotalView
is a depth-of-book data feed that includes all orders and quotes
from all Nasdaq members displayed in the Nasdaq Market Center as
well as the aggregate size of such orders and quotes at each price
level in the execution functionality of the Nasdaq Market Center).
See also Nasdaq Book Viewer, a description of which is available at
https://data.nasdaq.com/Book Viewer.aspx. See NYSE OpenBook
available at https://www.nyxdata.com/openbook (providing real-time
view of the NYSE limit order book).
\24\ See NYSE Market Data Pricing dated November 2016 available
at https://www.nyxdata.com/. Nasdaq charges distribution fees ranging
from $375 for 1-39 subscribers to $75,000 for more than 250
subscribers. See Nasdaq Rule 7023(b)(4).
---------------------------------------------------------------------------

User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for EDGA Summary Depth are equitable and
reasonable because they will result in greater availability to
Professional and Non-Professional Users. Moreover, introducing a modest
Non-Professional User fee for EDGA Summary Depth is reasonable because
it provides an additional method for retail investors to access EDGA
Summary Depth data by providing the same data that is available to
Professional Users. The Exchange believes that the proposed fees are
equitable and not unfairly discriminatory because they will be charged
uniformly to recipient firms and Users. The fee structure of
differentiated Professional and Non-Professional fees is utilized by
the Exchange for the Bats One Feed and has long been used by other
exchanges for their proprietary data products, and by the Nasdaq UTP
and the CTA and CQ Plans in order to reduce the price of data to retail
investors and make it more broadly available.\25\ Offering EDGA Summary
Depth to Non-Professional Users with the same data available to
Professional Users results in greater equity among data recipients.
---------------------------------------------------------------------------

\25\ See Securities Exchange Act Release Nos. 74285 (February
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February
24, 2015) (SR-EDGA-2015-09) (``Initial BATS One Feed Fee Filings'').
See also, e.g., Securities Exchange Act Release No. 20002, File No.
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA
data); and Nasdaq Rules 7023(b), 7047.
---------------------------------------------------------------------------

In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE and Nasdaq.
Specifically, NYSE offers NYSE OpenBook for a monthly fee of $60.00 per
professional subscriber and $15 per non-professional subscriber.\26\
Nasdaq offers Nasdaq TotalView-Aggregated for a monthly fee of $70.00
per professional subscriber and $14 per non-professional
subscriber.\27\ The Exchange's proposed per User Fees for EDGA Summary
Depth are less than the NYSE and Nasdaq fees.
---------------------------------------------------------------------------

\26\ See NYSE Market Data Pricing dated November 2016 available
at https://www.nyxdata.com/.
\27\ See Nasdaq Rule 7023(b)(2).
---------------------------------------------------------------------------

Enterprise Fee. The proposed Enterprise Fee for EDGA Summary Depth
is equitable and reasonable as the fees proposed are less than the
enterprise fees currently charged for Nasdaq TotalView-Aggregated.
Nasdaq charges an enterprise fee of $100,000 per month for Nasdaq
TotalView-Aggregated,\28\ which is far greater than the proposed
Enterprise Fee of $20,000 per month for EDGA Summary Depth. In
addition, the Enterprise Fee proposed by the Exchange could result in a
fee reduction for recipient firms with a large number of Professional
and Non-Professional Users. If a recipient firm has a smaller number of
Professional Users of EDGA Summary Depth, then it may continue using
the per User structure and benefit from the per User Fee reductions. By
reducing prices for recipient firms with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute EDGA Summary Depth, thereby
expanding the distribution of this market data for the benefit of
investors.
---------------------------------------------------------------------------

\28\ See Nasdaq Rule 7023(c)(2) (stating that a distributor that
is also a broker-dealer pays a monthly fee of $100,000 for the right
to provide Nasdaq TotalView and for display usage for internal
distribution, or for external distribution to both professional and
non-professional subscribers with whom the firm has a brokerage
relationship.) Nasdaq also charges an enterprise fee of $25,000 to
provide Nasdaq TotalView to an unlimited number of non-professional
subscribers only. See Nasdaq Rule 7023(c)(1).
---------------------------------------------------------------------------

[[Page 896]]

proposed Enterprise Fee will not have to report the number of Users on
a monthly basis as they currently do, but rather will only have to
count natural person users every six months, which is a significant
reduction in administrative burden. Finally, the Exchange believes that
it is equitable and not unfairly discriminatory to establish an
Enterprise Fee because it reduces the Exchange's costs and the
Distributor's administrative burdens in tracking and auditing large
numbers of Users.
Digital Media Enterprise Fee. The Exchange believes that the
proposed Digital Media Enterprise Fee for EDGA Summary Depth provides
for an equitable allocation of reasonable fees among recipients of the
data and is not designed to permit unfair discrimination among
customers, brokers, or dealers. In establishing the Digital Media
Enterprise Fee, the Exchange recognizes that there is demand for a more
seamless and easier-to-administer data distribution model that takes
into account the expanded variety of media and communication devices
that investors utilize today. The Exchange believes the Digital Media
Enterprise Fee will be easy to administer because data recipients that
purchase it would not be required to differentiate between Professional
and Non-Professional Users, account for the extent of access to the
data, or report the number of Users. This is a significant reduction on
a recipient firm's administrative burdens and is a significant value to
investors. For example, a television broadcaster could display EDGA
Summary Depth data during market-related programming and on its Web
site or allow viewers to view the data via their mobile devices,
creating a more seamless distribution model that will allow investors
more choice in how they receive and view market data, all without
having to account for and/or measure who accesses the data and how
often they do so.
The proposed Digital Media Enterprise Fee is equitable and
reasonable because it will also enable recipient firms to more widely
distribute data from EDGA Summary Depth to investors for informational
purposes at a lower cost than is available today. For example, a
recipient firm may purchase an Enterprise license in the amount of
$20,000 per month for to receive EDGA Summary Depth from an External
Distributor for an unlimited number of Professional and Non-
Professional Users, which is greater than the proposed Digital Media
Enterprise Fee. The Exchange also believes the amount of the Digital
Media Enterprise Fee is reasonable as compared to the existing
enterprise fees discussed above because the distribution of EDGA
Summary Depth data is limited to television, Web sites, and mobile
devices for informational purposes only, while distribution of EDGA
Summary Depth data pursuant to an Enterprise license contains no such
limitation. The Exchange also believes that the proposed Digital Media
Enterprise Fee is equitable and reasonable because it is less than
similar fees charged by other exchanges.\29\
---------------------------------------------------------------------------

\29\ Nasdaq offers proprietary data products for distribution
over the internet and television under alternative fee schedules
that are subject to maximum fee of $50,000 [sic] per month. See
Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise fee
of $40,000 per month for the NYSE Trade Digital Media product. See
Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR
20983 (April 8, 2013) (SR-NYSE-2013-23).
---------------------------------------------------------------------------

EDGA Depth
User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for EDGA Depth are equitable and
reasonable because they will result in greater availability to
Professional and Non-Professional Users. Moreover, introducing a modest
Non-Professional User fee for EDGA Depth is reasonable because it
provides an additional method for retail investors to access EDGA Depth
data by providing the same data that is available to Professional
Users. The Exchange believes that the proposed fees are equitable and
not unfairly discriminatory because they will be charged uniformly to
recipient firms and Users. The fee structure of differentiated
Professional and Non-Professional fees is utilized by the Exchange and
has long been used by other exchanges for their proprietary data
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to
reduce the price of data to retail investors and make it more broadly
available.\30\ Offering EDGA Depth to Non-Professional Users with the
same data available to Professional Users results in greater equity
among data recipients. The Exchange also believes it is equitable,
reasonable, and not unfairly discriminatory to charge User fees to
Internal Distributors, as such fees are currently charged by NYSE and
Nasdaq.\31\
---------------------------------------------------------------------------

\30\ See supra note 24.
\31\ See supra notes 24 and 25 (not limiting the application of
user fees to external distribution only).
---------------------------------------------------------------------------

In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE and Nasdaq.
Specifically, NYSE offers NYSE OpenBook Ultra for a monthly fee of
$60.00 per professional subscriber and $15 per non-professional
subscriber.\32\ Nasdaq offers Nasdaq TotalView-ITCH for a monthly fee
of $70.00 per professional subscriber and $14 per non-professional
subscriber.\33\ The Exchange's proposed per User Fees for EDGA Depth
are less than the NYSE and Nasdaq fees.
---------------------------------------------------------------------------

\32\ See supra note 25.
\33\ See supra note 26.
---------------------------------------------------------------------------

Enterprise Fee. The proposed Enterprise Fee for EDGA Depth is
equitable and reasonable as compared to the enterprise fees currently
charged for Nasdaq TotalView-ITCH. Nasdaq charges an enterprise fee of
$100,000 per month for Nasdaq TotalView-ITCH,\34\ which is greater than
the proposed Enterprise Fee of $25,000 per month for EDGA Depth. In
addition, the Enterprise Fee proposed by the Exchange could result in a
fee reduction for recipient firms with a large number of Professional
and Non-Professional Users. If a recipient firm has a smaller number of
Professional Users of EDGA Depth, then it may continue using the per
User structure and benefit from the per User Fee reductions. By
reducing prices for recipient firms with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute EDGA Depth, thereby expanding the
distribution of this market data for the benefit of investors.
---------------------------------------------------------------------------

\34\ See supra note 27.
---------------------------------------------------------------------------

The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large numbers of Professional and Non-Professional Users.
Firms that pay the proposed Enterprise Fee will not have to report the
number of Users on a monthly basis as they currently do, but rather
will only have to count natural person users every six months, which is
a significant reduction in administrative burden. Finally, the Exchange
believes that it is equitable and not unfairly discriminatory to
establish an Enterprise Fee because it reduces the Exchange's costs and
the Distributor's administrative burdens in tracking and auditing large
numbers of Users.

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. The
Exchange's ability to price EDGA Depth and EDGA Summary Depth is

[[Page 897]]

constrained by: (i) Competition among exchanges, other trading
platforms, and Trade Reporting Facilities (``TRF'') that compete with
each other in a variety of dimensions; (ii) the existence of
inexpensive real-time consolidated data and market-specific data and
free delayed data; and (iii) the inherent contestability of the market
for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
In addition, EDGA Summary Depth and EDGA Depth compete with a
number of alternative products. For instance, EDGA Summary Depth and
EDGA Depth do provide a complete picture of all trading activity in a
security. Rather, the other national securities exchanges, the several
TRFs of FINRA, and Electronic Communication Networks (``ECN'') that
produce proprietary data all produce trades and trade reports. Each is
currently permitted to produce last sale information products, and many
currently do, including Nasdaq and NYSE. In addition, market
participants can gain access to EDGA last sale and depth-of-book
quotations, though integrated with the prices of other markets, on
feeds made available through the SIPs.
In sum, the availability of a variety of alternative sources of
information imposes significant competitive pressures on Exchange data
products and the Exchange's compelling need to attract order flow
imposes significant competitive pressure on the Exchange to act
equitably, fairly, and reasonably in setting the proposed data product
fees. The proposed data product fees are, in part, responses to that
pressure. The Exchange believes that the proposed fees would reflect an
equitable allocation of its overall costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish fair, reasonable, and not
unreasonably discriminatory fees and an equitable allocation of fees
among all Users. The existence of alternatives to EDGA Depth and EDGA
Summary Depth, including existing similar feeds by other exchanges,
consolidated data, and proprietary data from other sources, ensures
that the Exchange cannot set unreasonable fees, or fees that are
unreasonably discriminatory, when vendors and subscribers can elect
these alternatives or choose not to purchase a specific proprietary
data product if its cost to purchase is not justified by the returns
any particular vendor or subscriber would achieve through the purchase.
Lastly, the Exchange represents that the increase in pricing of
EDGA Depth and the proposed pricing of the EDGA Summary Feed would
continue to enable a competing vendor to create a competing product to
the Exchange's Bats One Feed on the same price and latency basis as the
Exchange. The Bats One Feed is a data feed that disseminates, on a
real-time basis, the aggregate BBO of all displayed orders for
securities traded on each of the Bats Exchanges and for the Bats
Exchanges report quotes under the CTA Plan or the Nasdaq/UTP Plan. The
Bats One Feed also contains the individual last sale information for
the Bats Exchanges (collectively with the aggregate BBO, the ``Bats One
Summary Feed''). In addition, the Bats One Feed contains optional
functionality which enables recipients to receive aggregated two-sided
quotations from the Bats Exchanges for up to five (5) price levels
(``Bats One Premium Feed'').\35\ The Exchange uses the following data
feeds to create the Bats One Feed, each of which are available to
vendors: EDGX Depth, EDGA Depth, BYX Depth, and the BZX Depth.
---------------------------------------------------------------------------

\35\ See Exchange Rule 13.8(b). See also Securities Exchange Act
Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31,
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055;
SR-BYX-2014-030) (Notice of Amendments No. 2 and Order Granting
Accelerated Approval to Proposed Rule Changes, as Modified by
Amendments Nos. 1 and 2, to Establish a New Market Data Product
called the Bats One Feed) (``Bats One Approval Order'').
---------------------------------------------------------------------------

When adopting the Bats One Feed, the Exchange represented that a
vendor could create a competing product based in the data feed used to
construct the Bats One Feed on the same cost and latency basis as the
Exchange.\36\ Therefore, the Exchange designed the pricing of these
products so that their aggregate cost is not greater than the Bats One
Feed, thereby enabling a vendor to create a competing product to the
Bats One Feed on the same cost basis as the Exchange. However, the
Exchange now proposes to increase the cost of EDGA Depth, which when
combined with the proposed increases by its affiliates for their depth
products, would cause their aggregate cost to be higher than the Bats
One Premium Feed.\37\ However, to ensure that a vendor could continue
to create a competing product to the Bats One Premium Feed at no
greater cost, that vendor could now utilize EDGA Summary Depth, as well
as the Summary Depth feeds of BZX, BYX, and EDGX to create a competing
product to the Bats One Premium Feed for less cost and on the same
latency basis as the Exchange.\38\ The Exchange has designed the
content and pricing of EDGA Summary Depth, and related products by its
affiliates, so that a vendor could utilize those feeds, in lieu of the
Bats Exchange's existing depth-of-book products, to construct a
competing product on the same cost and latency basis as the Exchange.
The pricing the Exchange and its affiliates propose to charge for
Summary Depth feeds would be lower than the cost to obtain the Bats One
Premium Feed.\39\ Such pricing would continue to enable a vendor to
receive each of the Bats Exchange's Summary Depth feeds and offer a
similar product to the Bats One Premium Feed on a competitive basis and
at no greater cost than the Exchange.
---------------------------------------------------------------------------

\36\ Id.
\37\ The Exchange notes that a vendor seeking to create a
product to compete with the Bats One Summary Feed may continue to
utilize each of the Bats Exchange's Top and Last Sale data feeds,
the aggregate cost of which is less than the Bats One Summary Feed.
\38\ While the proposed EDGA Summary Depth feed does not contain
the symbol summary or consolidated volume data included in the Bats
One Feed, a vendor could include this information in a competing
product as this information is easily derivable from the proposed
feeds or can be obtained from the securities information processors
on the same terms as the Exchange.
\39\ While the aggregate cost of each of the Bats Exchange's
Summary Depth Products equals the cost of the Bats One Premium Feed,
the cost of the Bats One Feed continues to be greater because
subscribers are required to pay an additional $1,000 aggregation
fee. See the Exchange's fee schedule available at https://www.bats.com/us/equities/membership/fee_schedule/edga/.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

The Exchange has neither solicited nor received written comments on
the proposed rule change.

[[Page 898]]

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 \40\ and paragraph (f) of Rule 19b-4
thereunder.\41\ 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.
---------------------------------------------------------------------------

\40\ 15 U.S.C. 78s(b)(3)(A).
\41\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-BatsEDGA-2016-32 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsEDGA-2016-32. 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 also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsEDGA-2016-32 and should
be submitted on or before January 25, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

\42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31859 Filed 1-3-17; 8:45 am]
BILLING CODE 8011-01-P

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