Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on the Exchange's Equity Options Platform, 14045-14048 [2017-05212]

Download as PDF Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices transactions with the Fund of Funds.3 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. 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. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05207 Filed 3–15–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. mstockstill on DSK3G9T082PROD with NOTICES Extension: Rule 15c3–3, SEC File No. 270–087, OMB Control No. 3235–0078 3 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 17:12 Mar 15, 2017 Jkt 241001 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the existing collection of information provided for in Rule 15c3–3 (17 CFR 240.15c3–3), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (‘‘Exchange Act’’). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Rule 15c3–3 requires that a brokerdealer that holds customer securities obtain and maintain possession and control of fully-paid and excess margin securities they hold for customers. In addition, the Rule requires that a brokerdealer that holds customer funds make either a weekly or monthly computation to determine whether certain customer funds need to be segregated in a special reserve bank account for the exclusive benefit of the firm’s customers. It also requires that a broker-dealer maintain a written notification from each bank where a Special Reserve Bank Account is held acknowledging that all assets in the account are for the exclusive benefit of the broker-dealer’s customers, and to provide written notification to the Commission (and its designated examining authority) under certain, specified circumstances. Finally, brokerdealers that sell securities futures products (‘‘SFP’’) to customers must provide certain notifications to customers and make a record of any changes of account type. A broker-dealer required to maintain the Special Reserve Bank Account prescribed by Rule 15c3–3 must obtain and retain a written notification from each bank in which it has a Special Reserve Bank Account to evidence the bank’s acknowledgement that assets deposited in the Account are being held by the bank for the exclusive benefit of the broker-dealer’s customers. In addition, a broker-dealer must immediately notify the Commission and its designated examining authority if it fails to make a required deposit to its Special Reserve Bank Account. Finally, a broker-dealer that effects transactions in SFPs for customers also will have paperwork burdens to make a record of each change in account type. The Commission staff estimates a total annual time burden of 517,348 hours and an aggregate cost of $1,433,254 to comply with the rule. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 14045 information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments to: Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: March 13, 2017. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05269 Filed 3–15–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80205; File No. SR– BatsBZX–2017–17] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on the Exchange’s Equity Options Platform March 10, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 1, 2017, Bats BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (the ‘‘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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 2 17 E:\FR\FM\16MRN1.SGM 16MRN1 14046 Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices 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. eliminate the existing Non-Customer Non-Penny Pilot Take Volume Tier 2, under footnote 13; and (vi) increase the discounted fee provided in the NonCustomer Non-Penny Pilot Take Volume Tier 3 (to be re-numbered as Tier 2), under footnote 13. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-members of the Exchange pursuant to BZX Rules 15.1(a) and (c). The text of the proposed rule change is available at the Exchange’s Web site at www.bats.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. Decrease the Standard Rebate Provided by Fee Code PF II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule for its equity options platform (‘‘BZX Options’’) to: (i) Decrease the standard rebate provided by fee code PF; (ii) increase the standard fee assessed by fee code NP; (iii) increase the enhanced rebate provided in Firm, Broker Dealer and Joint Back Office Non-Penny Pilot Add Volume Tier 3, under footnote 8; (iv) increase the discounted fee provided in the NonCustomer 6 Non-Penny Pilot Take Volume Tier 1, under footnote 13; (v) mstockstill on DSK3G9T082PROD with NOTICES 4 17 CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 6 ‘‘Non-Customer’’ applies to any transaction identified by a Member for clearing which is not in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ‘‘Professional’’ as defined in Exchange Rule 16.1. See the Exchange’s fee schedule available at http:// www.bats.com/us/options/membership/fee_ schedule/bzx/. VerDate Sep<11>2014 17:12 Mar 15, 2017 Jkt 241001 Currently, fee code PF of the Exchange’s fee schedule sets forth the standard rebate of $0.36 per contract for Firm,7 Broker Dealer,8 and Join Back Office 9 orders that add liquidity on the Exchange in Penny-Pilot securities. The Exchange now proposes to reduce this standard rebate to $0.26 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect new standard rebate. Increase the Standard Fee Assessed by Fee Code NP Currently, fee code NP of the Exchange’s fee schedule sets forth the standard fee of $1.07 per contract for Non-Customer orders that remove liquidity on the Exchange in Non-Penny Pilot securities. The Exchange now proposes to increase this standard fee to $1.10 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect new standard fee. Increase the Enhanced Rebate Provided in Firm, Broker Dealer and Joint Back Office Non-Penny Pilot Add Volume Tier 3, Under Footnote 8 Firm, Broker Dealer and Joint Back Office orders that add liquidity in NonPenny Pilot securities yield fee code NF and are provided a standard rebate of $0.30 per contract. Footnote 8 of the fee schedule sets forth three tiers, each providing enhanced rebates between $0.45 and $0.69 per contract to a Member’s order that yields fee code NF upon satisfying monthly volume criteria. Under Tier 3, qualifying Members earn a rebate per share of $0.69 on Firm, Broker Dealer and Joint Back Office orders that add liquidity in options in Non Penny Pilot securities. Currently, to qualify for this tier a 7 ‘‘Firm’’ applies to any transaction identified by a Member for clearing in the Firm range at the OCC, excluding any Joint Back Office transaction. Id. 8 ‘‘Broker Dealer’’ applies to any order for the account of a broker dealer, including a foreign broker dealer, that clears in the Customer range at the Options Clearing Corporation (‘‘OCC’’). Id. 9 ‘‘Joint Back Office’’ applies to any transaction identified by a Member for clearing in the Firm range at the OCC that is identified with an origin code as Joint Back Office. A Joint Back Office participant is a Member that maintains a Joint Back Office arrangement with a clearing broker-dealer. Id. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Member must have: (i) An ADV 10 greater than or equal to 2.30% of average OCV; 11 and (ii) an ADAV 12 in Away Market Maker,13 Firm, Broker Dealer and Joint Back Office orders greater than or equal to 1.65% of average OCV. The Exchange proposes to increase the enhanced rebate provided by Tier 3 to $0.82 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect this new enhanced rebate. Modifications to Non-Customer NonPenny Pilot Take Volume Tiers Under Footnote 13 Non-Customer orders that yield fee code NP are charged a standard fee of $1.07 per contract. Footnote 13 of the fee schedule sets forth three tiers, each providing reduced fees of either $1.01 or $1.02 per contract to a Member’s order that yields fee code NP upon satisfying monthly volume criteria. • Tier 1 offers a reduced fee of $1.02 per share and currently requires that a Member has: (i) An ADAV in Customer 14 orders greater than or equal to 0.80% of average OCV; (ii) an ADAV in Market Maker 15 orders greater than or equal to 0.35% of average OCV; and (iii) on the Exchange’s equity securities platform (‘‘BZX Equities’’) an ADAV greater than or equal to 0.30% of average TCV. As amended, Tier 1 will offer a reduced fee of $1.04 per share. The Exchange does not propose to modify the required criteria for this Tier as part of this filing. • Tier 2 offers a reduced fee of $1.02 per share and currently requires that a 10 ‘‘ADV’’ means average daily volume calculated as the number of contracts added or removed, combined, per day. Id. 11 ‘‘OCV’’ means the total equity and ETF options volume that clears in the Customer range at the Options Clearing Corporation (‘‘OCC’’) for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. See the Exchange’s fee schedule available at http://www.bats.com/us/ options/membership/fee_schedule/bzx/. 12 ‘‘ADAV’’ means average daily added volume calculated as the number of contracts added per day. Id. 13 ‘‘Away Market Maker’’ applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is not registered with the Exchange as a Market Maker, but is registered as a market maker on another options exchange. Id. 14 ‘‘Customer’’ applies to any transaction identified by a Member for clearing in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ‘‘Professional’’ as defined in Exchange Rule 16.1. Id. 15 ‘‘Market Maker’’ applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is registered with the Exchange as a Market Maker as defined in Rule 16.1(a)(37). See the Exchange’s fee schedule available at http://www.bats.com/us/ options/membership/fee_schedule/bzx/. E:\FR\FM\16MRN1.SGM 16MRN1 Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices Member has an ADAV in Customer orders greater than or equal to 1.30% of average OCV. The Exchange proposes to eliminate Tier 2. • Tier 3 offers a reduced fee of $1.01 per share and currently requires that a Member has an ADAV in Customer orders greater than or equal to 1.30% of average OCV. The Exchange proposes to re-number Tier 3 as Tier 2 based on the elimination of Tier 2 discussed above. Also, as amended, Tier 2 will offer a reduced fee of $1.04 per share. The Exchange does not propose to modify the required criteria for this Tier as part of this filing. Implementation Date The Exchange proposes to implement the above changes to its fee schedule on March 1, 2017.16 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with the objectives of Section 6 of the Act,17 in general, and furthers the objectives of Section 6(b)(4),18 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. The Exchange also notes that it operates in a highly-competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The proposed rule changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange. mstockstill on DSK3G9T082PROD with NOTICES Fee Codes PF and NP The Exchange believes that its proposals to reduce the rebate provided by fee code PF and increase the fee provided by fee code NP are fair and equitable and reasonable because, such proposed fees and rebates remain consistent with pricing previously offered by the Exchange as well as competitors of the Exchange and do not represent a significant departure from the Exchange’s general pricing structure and will allow the Exchange to earn additional revenue that can be used to offset the addition of new pricing incentives. Lastly, the proposed changes to fee codes PF and NP are not unfairly 16 The Exchange notes that the date of its fee schedule was previously amended to state March 1, 2017 in SR–BatsBZX–2017–05. See Securities Exchange Act Release No. 79956 (February 3, 2017), 82 FR 10102 (February 9, 2017). 17 15 U.S.C. 78f. 18 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 17:12 Mar 15, 2017 Jkt 241001 discriminatory because they will apply equally to all Members. Modifications to the Volume Discount Tier Rebates and Required Criteria The Exchange believes that the proposed modifications to the tiered pricing structure are reasonable, fair and equitable, and non-discriminatory. The Exchange operates in a highly competitive market in which market participants may readily send order flow to many competing venues if they deem fees at the Exchange to be excessive or incentives provided to be insufficient. The proposed fee structure remains intended to attract order flow to the Exchange by offering market participants a competitive pricing structure. The Exchange believes it is reasonable to offer and incrementally modify incentives intended to help to contribute to the growth of the Exchange. Volume-based pricing such as that proposed herein have been widely adopted by exchanges, including the Exchange, and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to: (i) The value to an exchange’s market quality; (ii) associated higher levels of market activity, such as higher levels of liquidity provisions and/or growth patterns; and (iii) introduction of higher volumes of orders into the price and volume discovery processes. The proposed modifications proposed herein are also intended to incentivize additional Members to send orders to the Exchange in an effort to qualify for the enhanced rebate or reduced fee made available by the tiers, in turn contributing to the growth of the Exchange. Thus, the Exchange believes that the proposed modifications to the tiered pricing structure is a reasonable, fair and equitable, and not an unfairly discriminatory allocation of fees and rebates, because it will provide Members with an incentive to reach certain thresholds on the Exchange by contributing a meaningful amount of order flow to the Exchange. The Exchange believes the proposed change to each tier’s criteria is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposed amendment to its fee schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change represents a significant departure from previous pricing offered PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 14047 by the Exchange or pricing offered by the Exchange’s competitors. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange does not believe that the proposed change to the Exchange’s standard fees, rebates and tiered pricing structure burdens competition, but instead, enhances competition as it is intended to increase the competitiveness of the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 19 and paragraph (f) of Rule 19b–4 thereunder.20 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BatsBZX–2017–17 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities 19 15 20 17 E:\FR\FM\16MRN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 16MRN1 14048 Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BatsBZX–2017–17. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– BatsBZX–2017–17 and should be submitted on or April 6, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05212 Filed 3–15–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-members of the Exchange pursuant to EDGX Rules 15.1(a) and (c). The text of the proposed rule change is available at the Exchange’s Web site at www.bats.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 [Release No. 34–80204; File No. SR– BatsEDGX–2017–14] mstockstill on DSK3G9T082PROD with NOTICES ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 1, 2017, Bats EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (the ‘‘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. Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees as They Apply to the Equity Options Platform 1. Purpose The Exchange proposes to amend its fee schedule for its equity options platform (‘‘EDGX Options’’) to: (i) Adopt 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 2 17 March 10, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the 21 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:12 Mar 15, 2017 Jkt 241001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 fees for its recently adopted Qualified Contingent Cross Orders (‘‘QCC’’); 6 and (ii) modify the criteria of two tiers related to orders executed in Bats Auction Mechanism (‘‘BAM’’). Background of QCC The Exchange recently filed to adopt functionality allowing participants on the Exchange the ability to submit to the Exchange Qualified Contingent Cross Orders, an order type offered by multiple other options exchanges.7 The operation of Qualified Contingent Cross Orders on the Exchange will be substantially similar in all material respects to the operation of such orders on such other exchanges.8 Definitions of QCC In connection with this fee proposal, the Exchange proposes to adopt definitions necessary for QCC pricing. First, the Exchange proposes to adopt defined terms of ‘‘QCC’’ to refer to Qualified Contingent Cross Orders on the fee schedule. Second, the Exchange proposes to adopt the defined term ‘‘QCC Agency’’, which would be defined as a Qualified Contingent Cross Order represented as agent by a Member on behalf of another party, and submitted for execution pursuant to Rule 21.1. Third, the Exchange proposes to adopt the defined term ‘‘QCC Contra’’, which would be defined as a Qualified Contingent Cross Order submitted by a Member that will potentially execute against the QCC Agency Order pursuant to Rule 21.1. Pricing of QCC Orders The Exchange proposes to adopt four new fee codes in connection with QCC, which would be added to the Fee Codes and Associated Fees table of the Fee Schedule. These fee codes represent the fees applicable to QCC, as described below. As proposed, initially all executions in QCC orders would be provided free of charge. The Exchange proposes to adopt two fee codes for QCC Agency Orders, fee code QA and fee code QM, which would be applicable to Customer 9 and Non-Customer 10 QCC 6 See Securities Exchange Act Release No. 79942 (February 1, 2017), 82 FR 9804 (February 8, 2017) (SR–BatsEDGX–2017–11) (‘‘QCC Filing’’). 7 See ISE Rule 715(j), Supplementary Material .01 to ISE Rule 715 and ISE Rule 721(b); see also CBOE Rule 6.53(u); NASDAQ PHLX Rule 1080(o); NYSE Arca Rule 6.62(bb), Commentary .02 to NYSE Arca Rule 6.62 and NYSE Arca Rule 6.90. 8 See QCC Filing supra, note 6. 9 ‘‘Customer’’ applies to any transaction identified by a Member for clearing in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ‘‘Professional’’ as defined in Exchange Rule 16.1. 10 ‘‘Non-Customer’’ applies to any transaction that is not a Customer order. E:\FR\FM\16MRN1.SGM 16MRN1

Agencies

[Federal Register Volume 82, Number 50 (Thursday, March 16, 2017)]
[Notices]
[Pages 14045-14048]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05212]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80205; File No. SR-BatsBZX-2017-17]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use on the Exchange's Equity Options Platform

March 10, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 1, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``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

[[Page 14046]]

Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

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

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

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

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule for its equity 
options platform (``BZX Options'') to: (i) Decrease the standard rebate 
provided by fee code PF; (ii) increase the standard fee assessed by fee 
code NP; (iii) increase the enhanced rebate provided in Firm, Broker 
Dealer and Joint Back Office Non-Penny Pilot Add Volume Tier 3, under 
footnote 8; (iv) increase the discounted fee provided in the Non-
Customer \6\ Non-Penny Pilot Take Volume Tier 1, under footnote 13; (v) 
eliminate the existing Non-Customer Non-Penny Pilot Take Volume Tier 2, 
under footnote 13; and (vi) increase the discounted fee provided in the 
Non-Customer Non-Penny Pilot Take Volume Tier 3 (to be re-numbered as 
Tier 2), under footnote 13.
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    \6\ ``Non-Customer'' applies to any transaction identified by a 
Member for clearing which is not in the Customer range at the OCC, 
excluding any transaction for a Broker Dealer or a ``Professional'' 
as defined in Exchange Rule 16.1. See the Exchange's fee schedule 
available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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Decrease the Standard Rebate Provided by Fee Code PF

    Currently, fee code PF of the Exchange's fee schedule sets forth 
the standard rebate of $0.36 per contract for Firm,\7\ Broker 
Dealer,\8\ and Join Back Office \9\ orders that add liquidity on the 
Exchange in Penny-Pilot securities. The Exchange now proposes to reduce 
this standard rebate to $0.26 per contract. The Exchange also proposes 
to update the Standard Rates table accordingly to reflect new standard 
rebate.
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    \7\ ``Firm'' applies to any transaction identified by a Member 
for clearing in the Firm range at the OCC, excluding any Joint Back 
Office transaction. Id.
    \8\ ``Broker Dealer'' applies to any order for the account of a 
broker dealer, including a foreign broker dealer, that clears in the 
Customer range at the Options Clearing Corporation (``OCC''). Id.
    \9\ ``Joint Back Office'' applies to any transaction identified 
by a Member for clearing in the Firm range at the OCC that is 
identified with an origin code as Joint Back Office. A Joint Back 
Office participant is a Member that maintains a Joint Back Office 
arrangement with a clearing broker-dealer. Id.
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Increase the Standard Fee Assessed by Fee Code NP

    Currently, fee code NP of the Exchange's fee schedule sets forth 
the standard fee of $1.07 per contract for Non-Customer orders that 
remove liquidity on the Exchange in Non-Penny Pilot securities. The 
Exchange now proposes to increase this standard fee to $1.10 per 
contract. The Exchange also proposes to update the Standard Rates table 
accordingly to reflect new standard fee.

Increase the Enhanced Rebate Provided in Firm, Broker Dealer and Joint 
Back Office Non-Penny Pilot Add Volume Tier 3, Under Footnote 8

    Firm, Broker Dealer and Joint Back Office orders that add liquidity 
in Non-Penny Pilot securities yield fee code NF and are provided a 
standard rebate of $0.30 per contract. Footnote 8 of the fee schedule 
sets forth three tiers, each providing enhanced rebates between $0.45 
and $0.69 per contract to a Member's order that yields fee code NF upon 
satisfying monthly volume criteria. Under Tier 3, qualifying Members 
earn a rebate per share of $0.69 on Firm, Broker Dealer and Joint Back 
Office orders that add liquidity in options in Non Penny Pilot 
securities. Currently, to qualify for this tier a Member must have: (i) 
An ADV \10\ greater than or equal to 2.30% of average OCV; \11\ and 
(ii) an ADAV \12\ in Away Market Maker,\13\ Firm, Broker Dealer and 
Joint Back Office orders greater than or equal to 1.65% of average OCV. 
The Exchange proposes to increase the enhanced rebate provided by Tier 
3 to $0.82 per contract. The Exchange also proposes to update the 
Standard Rates table accordingly to reflect this new enhanced rebate.
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    \10\ ``ADV'' means average daily volume calculated as the number 
of contracts added or removed, combined, per day. Id.
    \11\ ``OCV'' means the total equity and ETF options volume that 
clears in the Customer range at the Options Clearing Corporation 
(``OCC'') for the month for which the fees apply, excluding volume 
on any day that the Exchange experiences an Exchange System 
Disruption and on any day with a scheduled early market close. See 
the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
    \12\ ``ADAV'' means average daily added volume calculated as the 
number of contracts added per day. Id.
    \13\ ``Away Market Maker'' applies to any transaction identified 
by a Member for clearing in the Market Maker range at the OCC, where 
such Member is not registered with the Exchange as a Market Maker, 
but is registered as a market maker on another options exchange. Id.
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Modifications to Non-Customer Non-Penny Pilot Take Volume Tiers Under 
Footnote 13

    Non-Customer orders that yield fee code NP are charged a standard 
fee of $1.07 per contract. Footnote 13 of the fee schedule sets forth 
three tiers, each providing reduced fees of either $1.01 or $1.02 per 
contract to a Member's order that yields fee code NP upon satisfying 
monthly volume criteria.
     Tier 1 offers a reduced fee of $1.02 per share and 
currently requires that a Member has: (i) An ADAV in Customer \14\ 
orders greater than or equal to 0.80% of average OCV; (ii) an ADAV in 
Market Maker \15\ orders greater than or equal to 0.35% of average OCV; 
and (iii) on the Exchange's equity securities platform (``BZX 
Equities'') an ADAV greater than or equal to 0.30% of average TCV. As 
amended, Tier 1 will offer a reduced fee of $1.04 per share. The 
Exchange does not propose to modify the required criteria for this Tier 
as part of this filing.
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    \14\ ``Customer'' applies to any transaction identified by a 
Member for clearing in the Customer range at the OCC, excluding any 
transaction for a Broker Dealer or a ``Professional'' as defined in 
Exchange Rule 16.1. Id.
    \15\ ``Market Maker'' applies to any transaction identified by a 
Member for clearing in the Market Maker range at the OCC, where such 
Member is registered with the Exchange as a Market Maker as defined 
in Rule 16.1(a)(37). See the Exchange's fee schedule available at 
http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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     Tier 2 offers a reduced fee of $1.02 per share and 
currently requires that a

[[Page 14047]]

Member has an ADAV in Customer orders greater than or equal to 1.30% of 
average OCV. The Exchange proposes to eliminate Tier 2.
     Tier 3 offers a reduced fee of $1.01 per share and 
currently requires that a Member has an ADAV in Customer orders greater 
than or equal to 1.30% of average OCV. The Exchange proposes to re-
number Tier 3 as Tier 2 based on the elimination of Tier 2 discussed 
above. Also, as amended, Tier 2 will offer a reduced fee of $1.04 per 
share. The Exchange does not propose to modify the required criteria 
for this Tier as part of this filing.

Implementation Date

    The Exchange proposes to implement the above changes to its fee 
schedule on March 1, 2017.\16\
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    \16\ The Exchange notes that the date of its fee schedule was 
previously amended to state March 1, 2017 in SR-BatsBZX-2017-05. See 
Securities Exchange Act Release No. 79956 (February 3, 2017), 82 FR 
10102 (February 9, 2017).
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\17\ in general, and 
furthers the objectives of Section 6(b)(4),\18\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive or incentives to be insufficient. The proposed 
rule changes reflect a competitive pricing structure designed to 
incentivize market participants to direct their order flow to the 
Exchange.
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(4).
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Fee Codes PF and NP

    The Exchange believes that its proposals to reduce the rebate 
provided by fee code PF and increase the fee provided by fee code NP 
are fair and equitable and reasonable because, such proposed fees and 
rebates remain consistent with pricing previously offered by the 
Exchange as well as competitors of the Exchange and do not represent a 
significant departure from the Exchange's general pricing structure and 
will allow the Exchange to earn additional revenue that can be used to 
offset the addition of new pricing incentives. Lastly, the proposed 
changes to fee codes PF and NP are not unfairly discriminatory because 
they will apply equally to all Members.

Modifications to the Volume Discount Tier Rebates and Required Criteria

    The Exchange believes that the proposed modifications to the tiered 
pricing structure are reasonable, fair and equitable, and non-
discriminatory. The Exchange operates in a highly competitive market in 
which market participants may readily send order flow to many competing 
venues if they deem fees at the Exchange to be excessive or incentives 
provided to be insufficient. The proposed fee structure remains 
intended to attract order flow to the Exchange by offering market 
participants a competitive pricing structure. The Exchange believes it 
is reasonable to offer and incrementally modify incentives intended to 
help to contribute to the growth of the Exchange.
    Volume-based pricing such as that proposed herein have been widely 
adopted by exchanges, including the Exchange, and are equitable because 
they are open to all Members on an equal basis and provide additional 
benefits or discounts that are reasonably related to: (i) The value to 
an exchange's market quality; (ii) associated higher levels of market 
activity, such as higher levels of liquidity provisions and/or growth 
patterns; and (iii) introduction of higher volumes of orders into the 
price and volume discovery processes.
    The proposed modifications proposed herein are also intended to 
incentivize additional Members to send orders to the Exchange in an 
effort to qualify for the enhanced rebate or reduced fee made available 
by the tiers, in turn contributing to the growth of the Exchange. Thus, 
the Exchange believes that the proposed modifications to the tiered 
pricing structure is a reasonable, fair and equitable, and not an 
unfairly discriminatory allocation of fees and rebates, because it will 
provide Members with an incentive to reach certain thresholds on the 
Exchange by contributing a meaningful amount of order flow to the 
Exchange. The Exchange believes the proposed change to each tier's 
criteria is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed amendment to its fee schedule 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. The 
Exchange does not believe that the proposed change to the Exchange's 
standard fees, rebates and tiered pricing structure burdens 
competition, but instead, enhances competition as it is intended to 
increase the competitiveness of the Exchange.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \19\ and paragraph (f) of Rule 19b-4 
thereunder.\20\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please 
include File Number SR-BatsBZX-2017-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities

[[Page 14048]]

and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBZX-2017-17. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsBZX-2017-17 and should 
be submitted on or April 6, 2017.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05212 Filed 3-15-17; 8:45 am]
BILLING CODE 8011-01-P