Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period, 38960-38962 [2017-17273]

Download as PDF 38960 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 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–MIAX– 2017–39 and should be submitted on or before September 6, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.55 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–17272 Filed 8–15–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81368; File No. SR– BatsBYX–2017–18] Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period asabaliauskas on DSKBBXCHB2PROD with NOTICES August 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 August 8, 2017, Bats BYX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6)(iii) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 55 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 1 15 VerDate Sep<11>2014 18:33 Aug 15, 2017 Jkt 241001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to extend the pilot period for the Exchange’s Retail Price Improvement (‘‘RPI’’) Program (the ‘‘Program’’), which was set to expire on July 31, 2017, for 12 months, to expire on July 31, 2018. 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 In November 2012, the Commission approved the RPI Program on a pilot basis.5 The Program is designed to attract retail order flow to the Exchange, and allows such order flow to receive potential price improvement. The Program is currently limited to trades occurring at prices equal to or greater than $1.00 per share. Under the Program, all Exchange Users 6 are permitted to provide potential price improvement for Retail Orders 7 in the form of non-displayed interest that is better than the national best bid that is a Protected Quotation (‘‘Protected NBB’’) or the national best offer that is a Protected Quotation (‘‘Protected 5 See Securities Exchange Act Release No. 68303 (November 27, 2012), 77 FR 71652 (December 3, 2012) (‘‘RPI Approval Order’’) (SR–BYX–2012–019). 6 A ‘‘User’’ is defined in BYX Rule 1.5(cc) as any member or sponsored participant of the Exchange who is authorized to obtain access to the System. 7 A ‘‘Retail Order’’ is defined in Rule 11.24(a)(2) as an agency order that originates from a natural person and is submitted to the Exchange by a RMO, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any computerized methodology. See Rule 11.24(a)(2). PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 NBO’’, and together with the Protected NBB, the ‘‘Protected NBBO’’).8 The Program was approved by the Commission on a pilot basis running one-year from the date of implementation.9 The Commission approved the Program on November 27, 2012.10 The Exchange implemented the Program on January 11, 2013, and has extended the pilot period four times.11 The pilot period for the Program expired on July 31, 2017. The lapse of the pilot was inadvertent and this filing seeks to reinstate the pilot under the same terms as the original pilot. Proposal To Extend the Operation of the Program The Exchange established the RPI Program in an attempt to attract retail order flow to the Exchange by potentially providing price improvement to such order flow. The Exchange believes that the Program promotes competition for retail order flow by allowing Exchange members to submit Retail Price Improvement Orders (‘‘RPI Orders’’) 12 to interact with Retail Orders. Such competition has the ability 8 The term Protected Quotation is defined in BYX Rule 1.5(t) and has the same meaning as is set forth in Regulation NMS Rule 600(b)(58). The terms Protected NBB and Protected NBO are defined in BYX Rule 1.5(s). The Protected NBB is the bestpriced protected bid and the Protected NBO is the best-priced protected offer. Generally, the Protected NBB and Protected NBO and the national best bid (‘‘NBB’’) and national best offer (‘‘NBO’’, together with the NBB, the ‘‘NBBO’’) will be the same. However, a market center is not required to route to the NBB or NBO if that market center is subject to an exception under Regulation NMS Rule 611(b)(1) or if such NBB or NBO is otherwise not available for an automatic execution. In such case, the Protected NBB or Protected NBO would be the best-priced protected bid or offer to which a market center must route interest pursuant to Regulation NMS Rule 611. 9 See RPI Approval Order, supra note 5 at 71652. 10 Id. 11 See Securities Exchange Act Release Nos. 71249 (January 7, 2014), 79 FR 2229 (January 13, 2014) (SR–BYX–2014–001) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the Pilot Period for the Retail Price Improvement Program); 74111 (January 22, 2015), 80 FR 4598 (January 28, 2015) (SR–BYX–2015–05) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend the Pilot Period for BATS Y-Exchange, Inc.’s Retail Price Improvement (‘‘RPI’’) Program for 12 Months, To Expire on January 31, 2016); 76965 (January 22, 2016), 81 FR 4682 (January 27, 2016) (SR–BYX–2016–01) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period); 78180 (June 28, 2016), 81 FR 43306 (July 1, 2016) (SR–BYX–2016–15) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period). 12 A ‘‘Retail Price Improvement Order’’ is defined in Rule 11.24(a)(3) as an order that consists of nondisplayed interest on the Exchange that is priced better than the Protected NBB or Protected NBO by at least $0.001 and that is identified as such. See Rule 11.24(a)(3). E:\FR\FM\16AUN1.SGM 16AUN1 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices to promote efficiency by facilitating the price discovery process and generating additional investor interest in trading securities, thereby promoting capital formation. The Exchange believes that extending the pilot is appropriate because it will allow the Exchange and the Commission additional time to gather and analyze data regarding the Program that the Exchange has committed to provide.13 As such, the Exchange believes that it is appropriate to extend the current operation of the Program.14 Through this filing, the Exchange seeks to extend the current pilot period of the Program until July 31, 2018. 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.15 In particular, the Exchange believes the proposed change furthers the objectives of Section 6(b)(5) of the Act,16 in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Exchange believes that extending the pilot period for the RPI Program is consistent with these principles because the Program is reasonably designed to attract retail order flow to the exchange environment, while helping to ensure that retail investors benefit from the better price that liquidity providers are willing to give their orders. Additionally, as previously stated, the competition promoted by the Program may facilitate the price discovery process and potentially generate additional investor interest in trading securities. The extension of the pilot period will allow the Commission and the Exchange to continue to monitor the Program for its potential effects on public price asabaliauskas on DSKBBXCHB2PROD with NOTICES 13 See RPI Approval Order, supra note 5 at 71655. with this filing, the Exchange has submitted a request for an extension of the exemption under Regulation NMS Rule 612 previously granted by the Commission that permits it to accept and rank the RPI orders in sub-penny increments. See Letter from Anders Franzon, SVP, Associate General Counsel, Bats BYX Exchange, Inc. to Brent J. Fields, Secretary, Securities and Exchange Commission dated August 7, 2017. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). 14 Concurrently VerDate Sep<11>2014 18:33 Aug 15, 2017 Jkt 241001 discovery, and on the broader market structure. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change extends an established pilot program for 12 months, thus allowing the RPI Program to enhance competition for retail order flow and contribute to the public price discovery process. 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 Because the foregoing proposed rule change does not: (A) Significantly affect the protection of investors or the public interest; (B) impose any significant burden on competition; and (C) by its terms, become operative for 30 days from the date on which it was filed or such shorter time as the Commission may designate it has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and paragraph (f)(6) of Rule 19b– 4 thereunder,18 the Exchange has designated this rule filing as noncontroversial. The Exchange has requested the Commission waive the standard fiveday pre-filing and 30-day operative delay requirements as specified in Rule 19b–4(f)(6)(iii) 19 so that BatsBYX’s RPI Program can continue to operate with limited interruption. The Commission waives the 5-day pre-filing requirement. In addition, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to reinstate the RPI Program on a pilot basis immediately. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission.20 17 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4. 19 17 CFR 240.19b–4(f)(6)(iii). 20 For purposes only of waiving the 30-day operative delay, the Commission has considered the 18 17 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 38961 IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– BatsBYX–2017–18 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. SR-BatsBYX–2017–18. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–BatsBYX– 2017–18 and should be submitted on or before September 6, 2017 proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\16AUN1.SGM 16AUN1 38962 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–17273 Filed 8–15–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81370; File No. SR–Phlx– 2017–64] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Pricing Schedule August 10, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 31, 2017 NASDAQ PHLX LLC (‘‘Phlx’’ or ‘‘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 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 proposes to amend the Exchange’s Pricing Schedule at Section I, entitled ‘‘Rebates and Fees for Adding and Removing Liquidity in SPY,’’ and Section IV, Part A entitled ‘‘PIXL Pricing’’ to amend pricing related to PIXL 3 executions. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on August 1, 2017. The text of the proposed rule change is available on the Exchange’s Web site at https://nasdaqphlx.cchwallstreet. com/, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 PIXLTM is the Exchange’s price improvement mechanism known as Price Improvement XL or PIXL. A member or member organization may electronically submit for execution an order it represents as agent on behalf of a public customer, broker-dealer, or any other entity (‘‘PIXL Order’’) against principal interest or against any other order (except as provided in Rule 1080(n)(i)(E)) it represents as agent (‘‘Initiating Order’’), provided it submits the PIXL order for electronic execution into the PIXL Auction pursuant to Rule 1080. See Exchange Rule 1080(n). asabaliauskas on DSKBBXCHB2PROD with NOTICES 1 15 VerDate Sep<11>2014 18:33 Aug 15, 2017 Jkt 241001 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend the Exchange’s Pricing Schedule at Section I, entitled ‘‘Rebates and Fees for Adding and Removing Liquidity in SPY’’ and specifically, the section that pertains to PIXL Executions in Standard and Poor’s Depositary Receipts/SPDRs (‘‘SPY’’).4 The Exchange also proposes to amend PIXL Pricing in Section IV, Part A, entitled ‘‘PIXL Pricing’’ for all other Multiply-Listed options symbols. First, the Exchange proposes to increase the SPY Complex PIXL rebate it offers Phlx members or member organizations that qualify for Section B, Customer Rebate Tiers 5 2 through 6 or qualify for the Monthly Firm Fee Cap. Presently, the Exchange offers a rebate of $0.10 per contract for all SPY Complex PIXL Orders greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. The Exchange proposes to increase that rebate to $0.12 per contract. In doing so, the Exchange desires to incentivize members or member organizations to 4 Options overlying Standard and Poor’s Depositary Receipts/SPDRs (‘‘SPY’’) are based on the SPDR exchange-traded fund (‘‘ETF’’), which is designed to track the performance of the S&P 500 Index. 5 Section B of the Pricing Schedule contains Customer Rebate Tiers which are calculated by totaling Customer volume in Multiply Listed Options (including SPY) that are electronicallydelivered and executed, except volume associated with electronic QCC Orders, as defined in Exchange Rule 1080(o). Rebates are paid on Customer Rebate Tiers according to certain categories. Members and member organizations under Common Ownership may aggregate their Customer volume for purposes of calculating the Customer Rebate Tiers and receiving rebates. Affiliated Entities may aggregate their Customer volume for purposes of calculating the Customer Rebate Tiers and receiving rebates. See Section B of the Pricing Schedule. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 transact a greater number of SPY Complex PIXL Orders while also incentivizing members or member organizations to submit Customer order flow on Phlx. Second, the Exchange proposes to increase the Complex PIXL (excluding SPY Options rebate it offers to Phlx members and member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap. Presently, the Exchange offers a rebate of $0.10 per contract for all Complex PIXL Orders (excluding SPY Options) greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of Complex SPY PIXL Orders in a month. The Exchange proposes to increase that rebate to $0.12 per contract. In doing so, the Exchange desires to incentivize members and member organizations to transact a greater number of Complex PIXL Orders while also incentivizing members and member organizations to submit Customer order flow on Phlx to obtain the $0.12 rebate on all Complex PIXL Orders (excluding SPY Options). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,7 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 8 Likewise, in NetCoalition v. Securities and Exchange Commission 9 (‘‘NetCoalition’’) the D.C. Circuit upheld 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 8 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 9 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). 7 15 E:\FR\FM\16AUN1.SGM 16AUN1

Agencies

[Federal Register Volume 82, Number 157 (Wednesday, August 16, 2017)]
[Notices]
[Pages 38960-38962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17273]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81368; File No. SR-BatsBYX-2017-18]


Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.24, Retail Price Improvement Program, To Extend the Pilot Period

August 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 August 8, 2017, Bats BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it 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).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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 extend the pilot period for the 
Exchange's Retail Price Improvement (``RPI'') Program (the 
``Program''), which was set to expire on July 31, 2017, for 12 months, 
to expire on July 31, 2018.
    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
    In November 2012, the Commission approved the RPI Program on a 
pilot basis.\5\ The Program is designed to attract retail order flow to 
the Exchange, and allows such order flow to receive potential price 
improvement. The Program is currently limited to trades occurring at 
prices equal to or greater than $1.00 per share. Under the Program, all 
Exchange Users \6\ are permitted to provide potential price improvement 
for Retail Orders \7\ in the form of non-displayed interest that is 
better than the national best bid that is a Protected Quotation 
(``Protected NBB'') or the national best offer that is a Protected 
Quotation (``Protected NBO'', and together with the Protected NBB, the 
``Protected NBBO'').\8\
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    \5\ See Securities Exchange Act Release No. 68303 (November 27, 
2012), 77 FR 71652 (December 3, 2012) (``RPI Approval Order'') (SR-
BYX-2012-019).
    \6\ A ``User'' is defined in BYX Rule 1.5(cc) as any member or 
sponsored participant of the Exchange who is authorized to obtain 
access to the System.
    \7\ A ``Retail Order'' is defined in Rule 11.24(a)(2) as an 
agency order that originates from a natural person and is submitted 
to the Exchange by a RMO, provided that no change is made to the 
terms of the order with respect to price or side of market and the 
order does not originate from a trading algorithm or any 
computerized methodology. See Rule 11.24(a)(2).
    \8\ The term Protected Quotation is defined in BYX Rule 1.5(t) 
and has the same meaning as is set forth in Regulation NMS Rule 
600(b)(58). The terms Protected NBB and Protected NBO are defined in 
BYX Rule 1.5(s). The Protected NBB is the best-priced protected bid 
and the Protected NBO is the best-priced protected offer. Generally, 
the Protected NBB and Protected NBO and the national best bid 
(``NBB'') and national best offer (``NBO'', together with the NBB, 
the ``NBBO'') will be the same. However, a market center is not 
required to route to the NBB or NBO if that market center is subject 
to an exception under Regulation NMS Rule 611(b)(1) or if such NBB 
or NBO is otherwise not available for an automatic execution. In 
such case, the Protected NBB or Protected NBO would be the best-
priced protected bid or offer to which a market center must route 
interest pursuant to Regulation NMS Rule 611.
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    The Program was approved by the Commission on a pilot basis running 
one-year from the date of implementation.\9\ The Commission approved 
the Program on November 27, 2012.\10\ The Exchange implemented the 
Program on January 11, 2013, and has extended the pilot period four 
times.\11\ The pilot period for the Program expired on July 31, 2017. 
The lapse of the pilot was inadvertent and this filing seeks to 
reinstate the pilot under the same terms as the original pilot.
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    \9\ See RPI Approval Order, supra note 5 at 71652.
    \10\ Id.
    \11\ See Securities Exchange Act Release Nos. 71249 (January 7, 
2014), 79 FR 2229 (January 13, 2014) (SR-BYX-2014-001) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Extend the Pilot Period for the Retail Price Improvement Program); 
74111 (January 22, 2015), 80 FR 4598 (January 28, 2015) (SR-BYX-
2015-05) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to Extend the Pilot Period for BATS Y-Exchange, Inc.'s 
Retail Price Improvement (``RPI'') Program for 12 Months, To Expire 
on January 31, 2016); 76965 (January 22, 2016), 81 FR 4682 (January 
27, 2016) (SR-BYX-2016-01) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price 
Improvement Program, To Extend the Pilot Period); 78180 (June 28, 
2016), 81 FR 43306 (July 1, 2016) (SR-BYX-2016-15) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, 
Retail Price Improvement Program, To Extend the Pilot Period).
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Proposal To Extend the Operation of the Program
    The Exchange established the RPI Program in an attempt to attract 
retail order flow to the Exchange by potentially providing price 
improvement to such order flow. The Exchange believes that the Program 
promotes competition for retail order flow by allowing Exchange members 
to submit Retail Price Improvement Orders (``RPI Orders'') \12\ to 
interact with Retail Orders. Such competition has the ability

[[Page 38961]]

to promote efficiency by facilitating the price discovery process and 
generating additional investor interest in trading securities, thereby 
promoting capital formation. The Exchange believes that extending the 
pilot is appropriate because it will allow the Exchange and the 
Commission additional time to gather and analyze data regarding the 
Program that the Exchange has committed to provide.\13\ As such, the 
Exchange believes that it is appropriate to extend the current 
operation of the Program.\14\ Through this filing, the Exchange seeks 
to extend the current pilot period of the Program until July 31, 2018.
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    \12\ A ``Retail Price Improvement Order'' is defined in Rule 
11.24(a)(3) as an order that consists of non-displayed interest on 
the Exchange that is priced better than the Protected NBB or 
Protected NBO by at least $0.001 and that is identified as such. See 
Rule 11.24(a)(3).
    \13\ See RPI Approval Order, supra note 5 at 71655.
    \14\ Concurrently with this filing, the Exchange has submitted a 
request for an extension of the exemption under Regulation NMS Rule 
612 previously granted by the Commission that permits it to accept 
and rank the RPI orders in sub-penny increments. See Letter from 
Anders Franzon, SVP, Associate General Counsel, Bats BYX Exchange, 
Inc. to Brent J. Fields, Secretary, Securities and Exchange 
Commission dated August 7, 2017.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\15\ In particular, 
the Exchange believes the proposed change furthers the objectives of 
Section 6(b)(5) of the Act,\16\ in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that 
extending the pilot period for the RPI Program is consistent with these 
principles because the Program is reasonably designed to attract retail 
order flow to the exchange environment, while helping to ensure that 
retail investors benefit from the better price that liquidity providers 
are willing to give their orders. Additionally, as previously stated, 
the competition promoted by the Program may facilitate the price 
discovery process and potentially generate additional investor interest 
in trading securities. The extension of the pilot period will allow the 
Commission and the Exchange to continue to monitor the Program for its 
potential effects on public price discovery, and on the broader market 
structure.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
extends an established pilot program for 12 months, thus allowing the 
RPI Program to enhance competition for retail order flow and contribute 
to the public price discovery process.

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

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, become operative for 30 days from the date on which it was 
filed or such shorter time as the Commission may designate it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \17\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\18\ the Exchange has 
designated this rule filing as non-controversial.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4.
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    The Exchange has requested the Commission waive the standard five-
day pre-filing and 30-day operative delay requirements as specified in 
Rule 19b-4(f)(6)(iii) \19\ so that BatsBYX's RPI Program can continue 
to operate with limited interruption. The Commission waives the 5-day 
pre-filing requirement. In addition, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will allow the Exchange to 
reinstate the RPI Program on a pilot basis immediately. For these 
reasons, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\20\
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    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-BatsBYX-2017-18 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BatsBYX-2017-18. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBYX-2017-18 and should be 
submitted on or before September 6, 2017


[[Page 38962]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-17273 Filed 8-15-17; 8:45 am]
 BILLING CODE 8011-01-P
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