Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Fees for Physical Ports as They Apply to the Exchange's Equity Options Platform, 53547-53549 [2017-24777]
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Federal Register / Vol. 82, No. 220 / Thursday, November 16, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
that each portfolio on average mails two
statements per year to meet the
requirements of the rule.4 The staff
further estimates that the time needed to
make the determinations required by the
rule and to prepare the statement
required under the rule is
approximately 1 hour per statement.
The total annual burden for all
portfolios therefore is estimated to be
approximately 23,636 burden hours.5
The staff estimates that approximately
one-third of the total annual burden
(7,879 hours) would be incurred by a
paralegal with an average hourly wage
rate of approximately $205 per hour,6
and approximately two-thirds of the
annual burden (15,757 hours) would be
incurred by a compliance clerk with an
average hourly wage rate of $66 per
hour.7 The staff therefore estimates that
the aggregate annual cost of complying
with the paperwork requirements of the
rule is approximately $2,655,157 ((7,879
hours × $205 = $1,615,195) + (15,757
hours × $66 = $1,039,962)).
To comply with state law, many
investment companies already must
distinguish the different sources from
which a shareholder distribution is paid
and disclose that information to
shareholders. Thus, many investment
companies would be required to
distinguish the sources of shareholder
dividends whether or not the
Commission required them to do so
under rule 19a–1.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act, and is not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules. Compliance
with the collection of information
required by rule 19a–1 is mandatory for
management companies that make
statements to shareholders pursuant to
section 19(a) of the Act. An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
4 A few portfolios make monthly distributions
from sources other than net income, so the rule
requires them to send out a statement 12 times a
year. Other portfolios never make such
distributions.
5 This estimate is based on the following
calculation: 11,818 management investment
company portfolios × 2 statements per year × 1 hour
per statement = 23,636 burden hours.
6 Hourly rates are derived from the Securities
Industry and Financial Markets Association
(‘‘SIFMA’’), Management and Professional Earnings
in the Securities Industry 2013, modified to account
for an 1800-hour work-year and inflation, and
multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead.
7 Hourly rates are derived from SIFMA’s Office
Salaries in the Securities Industry 2013, modified
to account for an 1800-hour work-year and
multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead.
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of information unless it displays a
currently valid control number.
The public may view the background
documentation for this information
collection at the following Web site,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
Dated: November 9, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–24749 Filed 11–15–17; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82052; File No. SRBatsBZX–2017–76]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Modify Its
Fees for Physical Ports as They Apply
to the Exchange’s Equity Options
Platform
November 9, 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 November
2, 2017, Cboe BZX Exchange, Inc.
(‘‘BZX’’ or the ‘‘Exchange’’) (formerly
known as Bats BZX Exchange, Inc.) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Exchange has designated the
proposed rule change as one
establishing or changing a member due,
fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 3 and Rule 19b–4(f)(2)
thereunder,4 which renders the
proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
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
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53547
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend the fee schedule applicable to
Members 5 and non-Members of the
Exchange pursuant to BZX Rules 15.1(a)
and (c) to modify its fees for physical
ports as they apply to the Exchange’s
equity options platform (‘‘BZX
Options’’).
The text of the proposed rule change
is available at the Exchange’s Web site
at www.markets.cboe.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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
A physical port is utilized by a
Member or non-Member to connect to
the Exchange at the data centers where
the Exchange’s servers are located. The
Exchange currently maintains a
presence in two third-party data centers:
(i) The primary data center where the
Exchange’s business is primarily
conducted on a daily basis, and (ii) a
secondary data center, which is
predominantly maintained for business
continuity purposes. The Exchange
currently assesses the following
physical connectivity fees for Members
and non-Members on a monthly basis:
$2,000 per physical port that connects
to the System 6 via 1 gigabyte circuit;
5 The term ‘‘Member’’ is defined as ‘‘any
registered broker or dealer that has been admitted
to membership in the Exchange.’’ See Exchange
Rule 1.5(n).
6 The term ‘‘System’’ is defined as ‘‘the electronic
communications and trading facility designated by
the Board through which securities orders of Users
are consolidated for ranking, execution and, when
Continued
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Federal Register / Vol. 82, No. 220 / Thursday, November 16, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
and $6,000 per physical port that
connects to the System via 10 gigabyte
circuit. The Exchange proposes to
increase the fee per physical port that
connects to the System via a 10 gigabyte
circuit from $6,000 per month to $7,000
per month in order to cover its
increased infrastructure costs associated
with establishing physical ports to
connect to the Exchange’s Systems and
enable it to continue to maintain and
improve its market technology and
services.7 The Exchange does not
propose to amend the fee for a 1
gigabyte circuit, which will remain
$2,000 per month. The Exchange
proposes to implement this amendment
to its fee schedule on January 2, 2018.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,8
in general, and furthers the objectives of
Section 6(b)(4),9 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. The proposed rule change
reflects a competitive pricing structure
designed to incent market participants
to direct their order flow to the
Exchange.
The Exchange believes that the
proposed rate is equitable and nondiscriminatory in that it applies
uniformly to all Members. Members and
non-Members will continue to choose
whether they want more than one
physical port and choose the method of
connectivity based on their specific
needs. All Members that voluntarily
select various service options will be
charged the same amount for the same
services. As is true of all physical
connectivity, all Members and nonMembers have the option to select any
connectivity option, and there is no
differentiation with regard to the fees
charged for the service.
The Exchange believes that the
proposal represents an equitable
allocation of reasonable dues, fees, and
other charges as its fees for physical
applicable, routing away.’’ See Exchange Rule
1.5(aa).
7 The Exchange also proposes two minor
technical amendments to this section of its fee
schedule. First is to change the word ‘‘Connection’’
to ‘‘Connectivity’’ in the section’s title. The second
is to change references to ‘‘G’’ for gigabyte to ‘‘Gb’’.
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(4).
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connectivity are reasonably constrained
by competitive alternatives. If a
particular exchange charges excessive
fees for connectivity, affected Members
and non-Members may opt to terminate
their connectivity arrangements with
that exchange, and adopt a possible
range of alternative strategies, including
routing to the applicable exchange
through another participant or market
center or taking that exchange’s data
indirectly. Accordingly, if the Exchange
charges excessive fees, it would stand to
lose not only connectivity revenues but
also revenues associated with the
execution of orders routed to it, and, to
the extent applicable, market data
revenues. The Exchange believes that
this competitive dynamic imposes
powerful restraints on the ability of any
exchange to charge unreasonable fees
for connectivity.
Furthermore, the proposed rule
change is also an equitable allocation of
reasonable dues, fees, and other charges
as the Exchange believes that the
increased fees obtained will enable it to
cover its increased infrastructure costs
associated with establishing physical
ports to connect to the Exchange’s
Systems. The additional revenue from
the increased fee will also enable the
Exchange to continue to maintain and
improve its market technology and
services.
Lastly, the Exchange believes the fees
and credits remain competitive with
those charged by other venues and
therefore continue to be reasonable and
equitably allocated to Members. For
instance, the proposed fees for a 10
gigabyte circuit of $7,000 per month is
less than analogous fees charged by the
Nasdaq Stock Market LLC (‘‘Nasdaq’’)
and NYSE Arca, Inc. (‘‘Arca’’), which
range from $10,000—$15,000 per month
for 10 gigabyte circuits.10
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 not
necessary or appropriate in furtherance
of the purposes of the Act. As discussed
above, the Exchange believes that fees
for connectivity are constrained by the
robust competition for order flow among
exchanges and non-exchange markets.
The Exchange does not believe that the
proposed changes represent a significant
departure from previous pricing offered
by the Exchange or pricing offered by
the Exchange’s competitors.
10 See Nasdaq Rule 7034(b) and the NYSE Arca
fee schedule available at https://www.nyse.com/
publicdocs/nyse/markets/nyse-arca/NYSE_Arca_
Marketplace_Fees.pdf (dated October 11, 2017).
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Additionally, Members may opt to
disfavor the Exchange’s pricing if they
believe that alternatives offer them
better value. Further, excessive fees for
connectivity would serve to impair an
exchange’s ability to compete for order
flow rather than burdening competition.
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
unsolicited 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 11 and paragraph (f) of Rule
19b–4 thereunder.12 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SRBatsBZX–2017–76 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–BatsBZX–2017–76. 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/
11 15
12 17
E:\FR\FM\16NON1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
16NON1
Federal Register / Vol. 82, No. 220 / Thursday, November 16, 2017 / Notices
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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BatsBZX–2017–76, and
should be submitted on or before
December 7, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–24777 Filed 11–15–17; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82049; File Nos. SR–
BatsBYX–2017–11; SR–BatsBZX–2017–38;
SR–BatsEDGA–2017–13; SR–BatsEDGX–
2017–22; SR–BOX–2017–16; SR–BX–2017–
023; SR–C2–2017–017; SR–CBOE–2017–
040; SR–CHX–2017–08; SR–FINRA–2017–
011; SR–GEMX–2017–17; SR–IEX–2017–16;
SR–ISE–2017–45; SR–MIAX–2017–18; SR–
MRX–2017–04; SR–NASDAQ–2017–046;
SR–NYSE–2017–22; SR–NYSEArca–2017–
52; SR–NYSEMKT–2017–26; SR–PEARL–
2017–20; SR–PHLX–2017–37]
Self-Regulatory Organizations; Bats
BYX Exchange, Inc.; Bats BZX
Exchange, Inc.; Bats EDGA Exchange,
Inc.; Bats EDGX Exchange, Inc.; BOX
Options Exchange LLC; C2 Options
Exchange, Incorporated; Chicago
Board Options Exchange,
Incorporated; Chicago Stock
Exchange, Inc.; Financial Industry
Regulatory Authority, Inc.; Investors
Exchange LLC; Miami International
Securities Exchange, LLC; MIAX
PEARL LLC; Nasdaq BX, Inc.; Nasdaq
GEMX, LLC; Nasdaq ISE, LLC; Nasdaq
MRX, LLC; Nasdaq PHLX LLC; The
Nasdaq Stock Market LLC; New York
Stock Exchange LLC; NYSE Arca, Inc.
and NYSE MKT LLC; Notice of
Designation of Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove Proposed Rule Changes
To Establish Fees for Industry
Members To Fund the Consolidated
Audit Trail
BILLING CODE 8011–01–P
November 9, 2017.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
On May 1, 2017,1 May 2, 2017,2 May
3, 2017,3 May 8, 2017,4 May 9, 2017,5
May 10, 2017,6 May 12, 2017,7 May 15,
13 17
1 Miami International Securities Exchange, LLC
and MIAX PEARL LLC filed their proposed rule
changes on May 1, 2017.
2 The Nasdaq Stock Market LLC and Nasdaq BX,
Inc. filed their proposed rule changes on May 2,
2017.
3 Chicago Stock Exchange, Inc. filed its proposed
rule change on May 3, 2017.
4 Financial Industry Regulatory Authority, Inc.
filed its proposed rule change on May 8, 2017.
5 Investors Exchange LLC originally filed its
proposed rule change on May 3, 2017 under File
No. SR–IEX–2017–13, and subsequently withdrew
that filing and filed a proposed rule change on May
9, 2017.
6 The New York Stock Exchange LLC, NYSE Arca,
Inc. and NYSE MKT LLC filed their proposed rule
changes on May 10, 2017.
7 Nasdaq GEMX LLC, Nasdaq ISE, LLC, Nasdaq
MRX, LLC and Nasdaq PHLX LLC originally filed
their proposed rule changes on May 3, 2017 under
File Nos. SR–GEMX–2017–11, SR–ISE–2017–40,
SR–MRX–2017–03, and SR–PHLX–2017–35, and
subsequently withdrew those filings and filed
proposed rule changes on May 12, 2017.
CFR 200.30–3(a)(12).
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53549
2017,8 May 16, 2017,9 and May 23,
2017,10 Bats BYX Exchange, Inc. (‘‘Bats
BYX’’) (n/k/a Cboe BYX Exchange,
Inc.),11 Bats BZX Exchange, Inc. (‘‘Bats
BZX’’) (n/k/a Cboe BZX Exchange,
Inc.),12 Bats EDGA Exchange, Inc. (‘‘Bats
EDGA’’) (n/k/a Cboe EDGA Exchange,
Inc.),13 Bats EDGX Exchange, Inc. (‘‘Bats
EDGX’’) (n/k/a Cboe EDGX Exchange,
Inc.),14 BOX Options Exchange LLC
(‘‘BOX’’), C2 Options Exchange,
Incorporated (‘‘C2’’) (n/k/a Cboe C2
Options Exchange, Inc.),15 Chicago
Board Options Exchange, Incorporated
(‘‘CBOE’’) (n/k/a Cboe Exchange, Inc.),16
Chicago Stock Exchange, Inc. (‘‘CHX’’),
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’), Investors
Exchange LLC (‘‘IEX’’), Nasdaq ISE, LLC
(‘‘ISE’’), Miami International Securities
Exchange, LLC (‘‘MIAX’’), MIAX
PEARL, LLC (‘‘PEARL’’), Nasdaq BX,
Inc. (‘‘BX’’), Nasdaq GEMX, LLC
(‘‘GEMX’’), Nasdaq MRX, LLC (‘‘MRX’’),
Nasdaq PHLX LLC (‘‘Phlx’’), The
Nasdaq Stock Market LLC (‘‘Nasdaq’’),
New York Stock Exchange LLC
(‘‘NYSE’’), NYSE Arca, Inc. (‘‘NYSE
Arca’’) and NYSE MKT LLC (‘‘NYSE
8 BOX Options Exchange LLC originally filed its
proposed rule change on May 11, 2017 under File
No. SR–BOX–2017–15, and subsequently withdrew
that filing and filed a proposed rule change on May
15, 2017.
9 Bats BYX Exchange, Inc., C2 Options Exchange,
Incorporated and Chicago Board Options Exchange,
Incorporated filed their proposed rule changes on
May 16, 2017. Bats EDGA Exchange, Inc. originally
filed its proposed rule change on May 5, 2017 under
File No. SR–BatsEDGA–2017–11, and subsequently
withdrew that filing on May 11, 2017 and filed a
proposed rule change on May 16, 2017.
10 Bats BZX Exchange, Inc. filed its proposed rule
changes on May 23, 2017. Bats EDGX Exchange,
Inc. originally filed its proposed rule change on
May 5, 2017 under File No. SR–BatsEDGX–2017–
20, and subsequently withdrew that filing on May
10, 2017 and filed a proposed rule change on May
23, 2017.
11 See Securities Exchange Act Release No. 81952
(October 26, 2017), 82 FR 50725 (November 1,
2017). The name change was not yet effective when
Bats BYX filed SR–BatsBYX–2017–11.
12 See Securities Exchange Act Release No. 81962
(October 26, 2017), 82 FR 50711 (November 1,
2017). The name change was not yet effective when
Bats BZX filed SR–BatsBZX–2017–38.
13 See Securities Exchange Act Release No. 81957
(October 26, 2017), 82 FR 50716 (November 1,
2017). The name change was not yet effective when
Bats EDGA filed SR–BatsEDGA–2017–13.
14 See Securities Exchange Act Release No. 81963
(October 26, 2017), 82 FR 50697 (November 1,
2017). The name change was not yet effective when
Bats EDGX filed SR–BatsEDGX–2017–22.
15 See Securities Exchange Act Release No. 81979
(October 30, 2017), 82 FR 51317 (November 3,
2017). The name change was not yet effective when
C2 filed SR–C2–2017–017.
16 See Securities Exchange Act Release No. 81981
(October 30, 2017), 82 FR 51309 (November 3,
2017). The name change was not yet effective when
CBOE filed SR–CBOE–2017–040.
E:\FR\FM\16NON1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 220 (Thursday, November 16, 2017)]
[Notices]
[Pages 53547-53549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24777]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82052; File No. SR-BatsBZX-2017-76]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
Its Fees for Physical Ports as They Apply to the Exchange's Equity
Options Platform
November 9, 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 November 2, 2017, Cboe BZX Exchange, Inc. (``BZX'' or the
``Exchange'') (formerly known as Bats BZX Exchange, Inc.) filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the Exchange. The Exchange has designated the
proposed rule change as one establishing or changing a member due, fee,
or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii)
of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the
proposed rule change effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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) to modify its fees for physical ports as they apply to
the Exchange's equity options platform (``BZX Options'').
---------------------------------------------------------------------------
\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.markets.cboe.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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
A physical port is utilized by a Member or non-Member to connect to
the Exchange at the data centers where the Exchange's servers are
located. The Exchange currently maintains a presence in two third-party
data centers: (i) The primary data center where the Exchange's business
is primarily conducted on a daily basis, and (ii) a secondary data
center, which is predominantly maintained for business continuity
purposes. The Exchange currently assesses the following physical
connectivity fees for Members and non-Members on a monthly basis:
$2,000 per physical port that connects to the System \6\ via 1 gigabyte
circuit;
[[Page 53548]]
and $6,000 per physical port that connects to the System via 10
gigabyte circuit. The Exchange proposes to increase the fee per
physical port that connects to the System via a 10 gigabyte circuit
from $6,000 per month to $7,000 per month in order to cover its
increased infrastructure costs associated with establishing physical
ports to connect to the Exchange's Systems and enable it to continue to
maintain and improve its market technology and services.\7\ The
Exchange does not propose to amend the fee for a 1 gigabyte circuit,
which will remain $2,000 per month. The Exchange proposes to implement
this amendment to its fee schedule on January 2, 2018.
---------------------------------------------------------------------------
\6\ The term ``System'' is defined as ``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(aa).
\7\ The Exchange also proposes two minor technical amendments to
this section of its fee schedule. First is to change the word
``Connection'' to ``Connectivity'' in the section's title. The
second is to change references to ``G'' for gigabyte to ``Gb''.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ 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. The proposed rule change reflects a competitive
pricing structure designed to incent market participants to direct
their order flow to the Exchange.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed rate is equitable and non-
discriminatory in that it applies uniformly to all Members. Members and
non-Members will continue to choose whether they want more than one
physical port and choose the method of connectivity based on their
specific needs. All Members that voluntarily select various service
options will be charged the same amount for the same services. As is
true of all physical connectivity, all Members and non-Members have the
option to select any connectivity option, and there is no
differentiation with regard to the fees charged for the service.
The Exchange believes that the proposal represents an equitable
allocation of reasonable dues, fees, and other charges as its fees for
physical connectivity are reasonably constrained by competitive
alternatives. If a particular exchange charges excessive fees for
connectivity, affected Members and non-Members may opt to terminate
their connectivity arrangements with that exchange, and adopt a
possible range of alternative strategies, including routing to the
applicable exchange through another participant or market center or
taking that exchange's data indirectly. Accordingly, if the Exchange
charges excessive fees, it would stand to lose not only connectivity
revenues but also revenues associated with the execution of orders
routed to it, and, to the extent applicable, market data revenues. The
Exchange believes that this competitive dynamic imposes powerful
restraints on the ability of any exchange to charge unreasonable fees
for connectivity.
Furthermore, the proposed rule change is also an equitable
allocation of reasonable dues, fees, and other charges as the Exchange
believes that the increased fees obtained will enable it to cover its
increased infrastructure costs associated with establishing physical
ports to connect to the Exchange's Systems. The additional revenue from
the increased fee will also enable the Exchange to continue to maintain
and improve its market technology and services.
Lastly, the Exchange believes the fees and credits remain
competitive with those charged by other venues and therefore continue
to be reasonable and equitably allocated to Members. For instance, the
proposed fees for a 10 gigabyte circuit of $7,000 per month is less
than analogous fees charged by the Nasdaq Stock Market LLC (``Nasdaq'')
and NYSE Arca, Inc. (``Arca''), which range from $10,000--$15,000 per
month for 10 gigabyte circuits.\10\
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\10\ See Nasdaq Rule 7034(b) and the NYSE Arca fee schedule
available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (dated October 11, 2017).
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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 not necessary or appropriate in
furtherance of the purposes of the Act. As discussed above, the
Exchange believes that fees for connectivity are constrained by the
robust competition for order flow among exchanges and non-exchange
markets. The Exchange does not believe that the proposed changes
represent 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. Further,
excessive fees for connectivity would serve to impair an exchange's
ability to compete for order flow rather than burdening competition.
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 unsolicited 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 \11\ and paragraph (f) of Rule 19b-4
thereunder.\12\ 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BatsBZX-2017-76 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-BatsBZX-2017-76. 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/
[[Page 53549]]
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. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsBZX-2017-76, and should
be submitted on or before December 7, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-24777 Filed 11-15-17; 8:45 am]
BILLING CODE 8011-01-P
