80 FR 29139 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 97 (May 20, 2015)
Federal Register Volume 80, Issue 97 (May 20, 2015)
| Page Range | 29139-29142 | |
| FR Document | 2015-12147 |
[Federal Register Volume 80, Number 97 (Wednesday, May 20, 2015)] [Notices] [Pages 29139-29142] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-12147] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74968; File No. SR-BATS-2015-38] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc. May 14, 2015. 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 May 6, 2015, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') 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 BATS Rules 15.1(a) and (c). Changes to the fee schedule pursuant to this proposal are effective upon filing. --------------------------------------------------------------------------- \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.batstrading.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify the ``Options Pricing'' section of its fee schedule, effective immediately, in order to modify pricing charged by the Exchange's options platform (``BATS Options'') including: (i) add a new standard rate and a fee code NM [[Page 29140]] associated with Market Maker \6\ orders that add liquidity in non-Penny Pilot Securities; \7\ (ii) add a new footnote 7 entitled ``Market Maker Non-Penny Pilot Add Volume Tiers''; (iii) simplifying the Exchange's physical connection fees; (iv) certain corresponding changes associated with the new rebates associated with Market Maker orders in non-Penny Pilot Securities; and (v) a non-substantive, clarifying change in footnote 5. --------------------------------------------------------------------------- \6\ ``Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC. \7\ ``Penny Pilot Securities'' are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. --------------------------------------------------------------------------- Standard Rate in Market Maker Orders in Non-Penny Pilot Securities Currently, the Exchange offers a rebate of $0.65 per contract for Market Maker orders that add liquidity in non-Penny Pilot Securities. The Exchange is proposing to create a new fee code NM and to change the standard rate for Market Maker orders that add liquidity in non-Penny Pilot Securities to a rebate of $0.42 per contract. Such orders will be eligible for the enhanced rebates available under the NBBO Setter Tiers, the Quoting Incentive Program Tiers, and the new Market Maker Non-Penny Pilot Add Volume Tiers proposed below. The Exchange is not proposing to change pricing for Professional \8\ or Firm \9\ orders or for any Market Maker orders that do not add liquidity non-Penny Pilot Securities. --------------------------------------------------------------------------- \8\ ``Professional'' applies to any transaction identified by a Member as such pursuant to Exchange Rule 16.1. \9\ ``Firm'' applies to any transaction identified by a Member for clearing in the Firm range at the OCC. --------------------------------------------------------------------------- Market Maker Non-Penny Pilot Add Volume Tiers As described above, the Exchange currently provides a rebate of $0.65 per contract for Market Maker orders that add liquidity in non- Penny Pilot Securities, which it proposes to change to $0.42 per contract. The Exchange is also proposing to add new footnote 7 to its fee schedule entitled ``Market Maker Non-Penny Pilot Add Volume Tiers'' in order to offer enhanced rebates for Market Maker orders in non-Penny Pilot Securities to Members that meet certain thresholds. Specifically, the Exchange is proposing to: (i) Provide a rebate of $0.45 per contract where the Member has an ADV \10\ equal to or greater than 0.30% of average TCV; \11\ and (ii) provide a rebate of $0.52 where the Member has an ADV equal to or greater than 1.00% of average TCV. Where a Member does not meet either of these thresholds, they would receive the standard rebate of $0.42 per contract, as proposed above. --------------------------------------------------------------------------- \10\ ``ADV'' means average daily volume calculated as the number of contracts added or removed, combined, per day. \11\ ``TCV'' means total consolidated volume calculated as the volume reported by all exchanges to the consolidated transaction reporting plan 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. --------------------------------------------------------------------------- Physical Connection Fees 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 fees to Members and non-Members of $1,000 for any 1G physical port connection at either data center and of $2,500 for any 10G physical port connection at either data center. The Exchange also provides market participants with the ability to access the Exchange's network through another data center entry point, or Point of Presence (``PoP''), at a data center other than the Exchange's primary or secondary data center.\12\ The Exchange currently charges $2,000 for any 1G physical port to connect to the Exchange in any data center where the Exchange maintains a PoP other than the Exchange's primary or secondary data center and $5,000 per month for each single physical 10G port provided by the Exchange to any Member or non-member in any data center where the Exchange maintains a PoP other than the Exchange's primary or secondary data center. --------------------------------------------------------------------------- \12\ See Securities Exchange Act Release No. 70199 (August 14, 2013), 78 FR 51250 (August 20, 2013) (SR-BATS-2013-036) (Order Approving a Proposed Rule Change to Introduce a Connectivity Option Through Points of Presence). --------------------------------------------------------------------------- The Exchange proposes to simplify its pricing structure by imposing a uniform rate for physical ports regardless of the data center in which the port connection is made. Specifically, the Exchange proposes to charge $1,000 per month for all 1G physical port connections and $2,500 per month for all 10G physical ports in any location where the Exchange offers the ability to connect to Exchange systems, including the secondary data center and any PoP location. Corresponding Changes In conjunction with the changes proposed above, the Exchange is proposing to make certain corresponding changes, including: (i) Add fee code NM references in footnotes 4 and 5; (ii) removing the reference to ``MM'' (short for Market Maker) from the description in fee code NA; and (iii) remove the words ``Market Maker Add Volume'' from both Market Maker Add Volume Tier 1 and Tier 2 in footnote 6. Clarifying Change The Exchange is proposing to add references to the fee codes PA and PF in footnote 5. While the Fee Codes and Associated Fees table indicates that footnote 5 applies to both fee codes PA and PF, the fee codes are not included in the footnote itself as fee codes to which the footnote is applicable. Effectiveness Date As noted above, the Exchange proposes to implement the amendments to its fee schedule effective immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.\13\ Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,\14\ in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. The Exchange 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 to be excessive. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f. \14\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes the proposed reduction of the standard rebate for Market Maker orders in non-Penny Pilot Securities that add liquidity is a reasonable, fair and equitable allocation of fees and rebates because it will provide Members with a greater incentive to increase their participation on BATS Options in order to receive a higher rebate by meeting any of the enhanced rebate tiers for which the orders are eligible, including the NBBO Setter Tiers, the Quoting Incentive Program Tiers, and the Market Maker Non-Penny Pilot Add Volume Tiers proposed herein. Finally, while adjusting the standard rebate of $0.65 per contract to remove liquidity to $0.42 per share will obviously result in a [[Page 29141]] reduction in rebates paid per contract to Members, the Exchange believes that any potential negative impact of this change will be outweighed by the Exchange's ability to apply the cost savings to other areas of the business, including enhanced rebates, reduced fees, and improved technology on the BATS Options. The Exchange also believes that the proposed fee change is non-discriminatory because it would apply uniformly to all Members [sic]. Volume-based rebates and fees such as the ones currently maintained on BATS Options have been widely adopted by equities and options exchanges 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 the value to an exchange's market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and introduction of higher volumes of orders into the price and volume discovery processes. The Exchange believes that the proposed addition of Market Maker Non- Penny Pilot Add Volume Tiers is a reasonable, fair and equitable allocation of fees and rebates because it will provide Members with a greater incentive to increase their participation on BATS Options in order to receive a higher rebate, which will result in enhanced market quality for all Members. The Exchange reiterates 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 to be excessive. Physical Connection Fees The Exchange believes that providing uniform rates for all 1G and 10G physical connections to Exchange is reasonable because such change represents a reduction in fees for any Member that connects to the Exchange at a PoP location and no change to fees for any Member located in the Exchange's primary or secondary data center. The Exchange also believes that the proposal is equitably allocated and not unreasonably discriminatory because, as proposed, market participants will be able to access the Exchange at uniform rates regardless of whether such access is at the Exchange's primary or secondary data center location or another location where the Exchange offers access. Corresponding and Clarifying Changes Finally, the Exchange believes that the corresponding and clarifying changes discussed above are non-substantive and would contribute to the protection of investors and the public interest by helping to avoid confusion with respect the Exchange fee schedule. 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. With respect to the proposed new rebates for Market Maker orders that add liquidity in non-Penny Pilot Securities, particularly the enhanced rebates available under the Market Maker Non-Penny Pilot Add Volume Tiers, the Exchange does not believe that any such changes burden competition, but instead, that they enhance competition, as they are intended to increase the competitiveness of BATS Options. As stated above, the Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if the deem fee structures to be unreasonable or excessive. The Exchange does not believe that the proposed change to physical port fees represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors. Rather, as described above, the Exchange is simply normalizing its fees for physical access to the Exchange regardless of the location where a physical connection is made. The offering is consistent with the Exchange's own economic incentives to facilitate as many market participants as possible in connecting to its market. 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. 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 \15\ and paragraph (f)(2) of Rule 19b-4 thereunder.\16\ 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BATS-2015-38 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BATS-2015-38. 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 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; [[Page 29142]] 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- BATS-2015-38 and should be submitted on or before June 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-12147 Filed 5-19-15; 8:45 am] BILLING CODE 8011-01-P
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with respect to the meaning, post all comments on the Commission’s prepared by the Exchange. The
administration, or enforcement of an Internet Web site (http://www.sec.gov/ Exchange has designated the proposed
existing rule. rules/sro.shtml). Copies of the rule change as one establishing or
submission, all subsequent changing a member due, fee, or other
(B) Clearing Agency’s Statement on
amendments, all written statements charge imposed by the Exchange under
Burden on Competition with respect to the proposed rule Section 19(b)(3)(A)(ii) of the Act 3 and
The proposed rule change will not change that are filed with the Rule 19b–4(f)(2) thereunder,4 which
have any impact, or impose any burden, Commission, and all written renders the proposed rule change
on competition. communications relating to the effective upon filing with the
proposed rule change between the Commission. The Commission is
(C) Clearing Agency’s Statement on
Commission and any person, other than publishing this notice to solicit
Comments on the Proposed Rule
those that may be withheld from the comments on the proposed rule change
Change Received From Members,
public in accordance with the from interested persons.
Participants, or Others
provisions of 5 U.S.C. 552, will be
Written comments relating to the available for Web site viewing and I. Self-Regulatory Organization’s
proposed rule change have not yet been printing in the Commission’s Public Statement of the Terms of Substance of
solicited or received. NSCC will notify Reference Room, 100 F Street NE., the Proposed Rule Change
the Commission of any written Washington, DC 20549 on official
comments received by NSCC. business days between the hours of The Exchange filed a proposal to
10:00 a.m. and 3:00 p.m. Copies of the amend the fee schedule applicable to
III. Date of Effectiveness of the Members 5 and non-members of the
Proposed Rule Change, and Timing for filing also will be available for
inspection and copying at the principal Exchange pursuant to BATS Rules
Commission Action 15.1(a) and (c). Changes to the fee
office of NSCC and on DTCC’s Web site
The foregoing rule change has become (http://dtcc.com/legal/sec-rule- schedule pursuant to this proposal are
effective pursuant to Section filings.aspx). All comments received effective upon filing.
19(b)(3)(A) 9 of the Act and paragraph (f) will be posted without change; the The text of the proposed rule change
of Rule 19b–4 10 thereunder. At any time Commission does not edit personal is available at the Exchange’s Web site
within 60 days of the filing of the identifying information from at www.batstrading.com, at the
proposed rule change, the Commission submissions. You should submit only principal office of the Exchange, and at
summarily may temporarily suspend information that you wish to make the Commission’s Public Reference
such rule change if it appears to the available publicly. All submissions Room.
Commission that such action is should refer to File Number SR–NSCC–
necessary or appropriate in the public 2015–002 and should be submitted on II. Self-Regulatory Organization’s
interest, for the protection of investors, or before June 10, 2015. Statement of the Purpose of, and
or otherwise in furtherance of the Statutory Basis for, the Proposed Rule
For the Commission, by the Division of Change
purposes of the Act. Trading and Markets, pursuant to delegated
IV. Solicitation of Comments authority.11 In its filing with the Commission, the
Robert W. Errett, Exchange included statements
Interested persons are invited to Deputy Secretary.
submit written data, views and concerning the purpose of and basis for
arguments concerning the foregoing,
[FR Doc. 2015–12145 Filed 5–19–15; 8:45 am] the proposed rule change and discussed
including whether the proposed rule BILLING CODE 8011–01–P any comments it received on the
change is consistent with the Act. proposed rule change. The text of these
Comments may be submitted by any of statements may be examined at the
SECURITIES AND EXCHANGE places specified in Item IV below. The
the following methods: COMMISSION Exchange has prepared summaries, set
Electronic Comments [Release No. 34–74968; File No. SR–BATS– forth in Sections A, B, and C below, of
• Use the Commission’s Internet 2015–38] the most significant parts of such
comment form (http://www.sec.gov/ statements.
rules/sro.shtml); or Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and A. Self-Regulatory Organization’s
• Send an email to rule-comments@ Statement of the Purpose of, and
sec.gov. Please include File Number SR– Immediate Effectiveness of a Proposed
Rule Change Related to Fees for Use Statutory Basis for, the Proposed Rule
NSCC–2015–002 on the subject line. Change
of BATS Exchange, Inc.
Paper Comments 1. Purpose
May 14, 2015.
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
to Brent J. Fields, Secretary, Securities The Exchange proposes to modify the
Securities Exchange Act of 1934 (the ‘‘Options Pricing’’ section of its fee
and Exchange Commission, 100 F Street ‘‘Act’’),1 and Rule 19b–4 thereunder,2
NE., Washington, DC 20549–1090. schedule, effective immediately, in
notice is hereby given that on May 6, order to modify pricing charged by the
All submissions should refer to File 2015, BATS Exchange, Inc. (the
Number SR–NSCC–2015–002. This file Exchange’s options platform (‘‘BATS
‘‘Exchange’’ or ‘‘BATS’’) filed with the Options’’) including: (i) add a new
mstockstill on DSK4VPTVN1PROD with NOTICES
number should be included on the Securities and Exchange Commission
subject line if email is used. To help the standard rate and a fee code NM
(‘‘Commission’’) the proposed rule
Commission process and review your change as described in Items I, II, and 3 15 U.S.C. 78s(b)(3)(A)(ii).
comments more efficiently, please use III below, which Items have been 4 17 CFR 240.19b–4(f)(2).
only one method. The Commission will 5 The term ‘‘Member’’ is defined as ‘‘any
11 17 CFR 200.30–3(a)(12). registered broker or dealer that has been admitted
9 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). to membership in the Exchange.’’ See Exchange
10 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4. Rule 1.5(n).
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reduction in rebates paid per contract to substantive and would contribute to the 19b–4 thereunder.16 At any time within
Members, the Exchange believes that protection of investors and the public 60 days of the filing of the proposed rule
any potential negative impact of this interest by helping to avoid confusion change, the Commission summarily may
change will be outweighed by the with respect the Exchange fee schedule. temporarily suspend such rule change if
Exchange’s ability to apply the cost it appears to the Commission that such
B. Self-Regulatory Organization’s
savings to other areas of the business, action is necessary or appropriate in the
Statement on Burden on Competition
including enhanced rebates, reduced public interest, for the protection of
fees, and improved technology on the The Exchange does not believe that investors, or otherwise in furtherance of
BATS Options. The Exchange also the proposed rule change will impose the purposes of the Act. If the
believes that the proposed fee change is any burden on competition not Commission takes such action, the
non-discriminatory because it would necessary or appropriate in furtherance Commission shall institute proceedings
apply uniformly to all Members [sic]. of the purposes of the Act. With respect to determine whether the proposed rule
Volume-based rebates and fees such to the proposed new rebates for Market should be approved or disapproved.
as the ones currently maintained on Maker orders that add liquidity in non-
BATS Options have been widely Penny Pilot Securities, particularly the IV. Solicitation of Comments
adopted by equities and options enhanced rebates available under the Interested persons are invited to
exchanges and are equitable because Market Maker Non-Penny Pilot Add submit written data, views and
they are open to all Members on an Volume Tiers, the Exchange does not arguments concerning the foregoing,
equal basis and provide additional believe that any such changes burden including whether the proposed rule
benefits or discounts that are reasonably competition, but instead, that they change is consistent with the Act.
related to the value to an exchange’s enhance competition, as they are Comments may be submitted by any of
market quality associated with higher intended to increase the the following methods:
levels of market activity, such as higher competitiveness of BATS Options. As Electronic Comments
levels of liquidity provision and/or stated above, the Exchange notes that it
growth patterns, and introduction of operates in a highly competitive market • Use the Commission’s Internet
higher volumes of orders into the price in which market participants can comment form (http://www.sec.gov/
and volume discovery processes. The readily direct order flow to competing rules/sro.shtml); or
Exchange believes that the proposed venues if the deem fee structures to be • Send an email to rule-comments@
addition of Market Maker Non-Penny unreasonable or excessive. sec.gov. Please include File Number SR–
Pilot Add Volume Tiers is a reasonable, The Exchange does not believe that BATS–2015–38 on the subject line.
fair and equitable allocation of fees and the proposed change to physical port Paper Comments
rebates because it will provide Members fees represents a significant departure
• Send paper comments in triplicate
with a greater incentive to increase their from previous pricing offered by the
to Secretary, Securities and Exchange
participation on BATS Options in order Exchange or pricing offered by the
Commission, 100 F Street NE.,
to receive a higher rebate, which will Exchange’s competitors. Rather, as
Washington, DC 20549–1090.
result in enhanced market quality for all described above, the Exchange is simply
Members. normalizing its fees for physical access All submissions should refer to File
The Exchange reiterates that it to the Exchange regardless of the Number SR–BATS–2015–38. This file
operates in a highly competitive market location where a physical connection is number should be included on the
in which market participants can made. The offering is consistent with subject line if email is used. To help the
readily direct order flow to competing the Exchange’s own economic Commission process and review your
venues if they deem fee levels to be incentives to facilitate as many market comments more efficiently, please use
excessive. participants as possible in connecting to only one method. The Commission will
its market. Accordingly, the Exchange post all comments on the Commission’s
Physical Connection Fees Internet Web site (http://www.sec.gov/
does not believe that the proposed
The Exchange believes that providing change will impair the ability of rules/sro.shtml). Copies of the
uniform rates for all 1G and 10G Members or competing venues to submission, all subsequent
physical connections to Exchange is maintain their competitive standing in amendments, all written statements
reasonable because such change the financial markets. with respect to the proposed rule
represents a reduction in fees for any change that are filed with the
Member that connects to the Exchange C. Self-Regulatory Organization’s Commission, and all written
at a PoP location and no change to fees Statement on Comments on the communications relating to the
for any Member located in the Proposed Rule Change Received From proposed rule change between the
Exchange’s primary or secondary data Members, Participants or Others Commission and any person, other than
center. The Exchange also believes that The Exchange has not solicited, and those that may be withheld from the
the proposal is equitably allocated and does not intend to solicit, comments on public in accordance with the
not unreasonably discriminatory this proposed rule change. The provisions of 5 U.S.C. 552, will be
because, as proposed, market Exchange has not received any written available for Web site viewing and
participants will be able to access the comments from members or other printing in the Commission’s Public
Exchange at uniform rates regardless of interested parties. Reference Room, 100 F Street NE.,
whether such access is at the Exchange’s Washington, DC 20549, on official
III. Date of Effectiveness of the
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primary or secondary data center business days between the hours of
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of such
location or another location where the
Commission Action filing will also be available for
Exchange offers access.
The foregoing rule change has become inspection and copying at the principal
Corresponding and Clarifying Changes effective pursuant to Section 19(b)(3)(A) office of the Exchange. All comments
Finally, the Exchange believes that of the Act 15 and paragraph (f)(2) of Rule received will be posted without change;
the corresponding and clarifying
changes discussed above are non- 15 15 U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f)(2).
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the Commission does not edit personal of the CBOE directly from a Public broker-dealer for execution at a stock
identifying information from Automated Routing (‘‘PAR’’) trading venue, the Exchange-designated
submissions. You should submit only workstation 5 to an Exchange-designated broker-dealer would be responsible for
information that you wish to make broker-dealer for electronic execution the proper execution, trade reporting,
available publicly. All submissions on a stock venue. In addition, the and submission to clearing of the stock
should refer to File Number SR–BATS– Exchange proposes to amend trade that is part of the stock-option
2015–38 and should be submitted on or Interpretation .06 to Rule 6.53C to order.10 The Exchange also represents
before June 10, 2015. require that the Clearing Trading Permit that once the stock component of a
For the Commission, by the Division of Holder (‘‘CTPH’’) 6 identified as the stock-option order is transmitted to the
Trading and Markets, pursuant to delegated Designated Give Up by the executing Exchange-designated broker-dealer, the
authority.17 TPH in accordance with CBOE Rule Exchange-designated broker-dealers is
Robert W. Errett, 6.21 on a stock-option order enter into responsible for determining whether the
Deputy Secretary. a brokerage agreement with the non- orders may be executed in accordance
[FR Doc. 2015–12147 Filed 5–19–15; 8:45 am] affiliated Exchange-designated broker- with all of the rules applicable to the
BILLING CODE 8011–01–P
dealers before the TPH electronically execution of equity orders, including
routes the stock component of the stock- compliance with applicable short sale,
option order to that Exchange- trade-through, and reporting rules.11
SECURITIES AND EXCHANGE designated broker-dealer for execution The Exchange believes that the
COMMISSION on a stock venue. proposed rule change will support more
Routing Stock Component of a Stock- efficient stock-option order execution,
[Release No. 34–74960; File No. SR–CBOE– Option Order via PAR. Currently, the streamline the steps required for open-
2015–029] outcry stock-option order trading, and
stock component of stock-option orders
Self-Regulatory Organizations; handled and processed on the Exchange enhance the Exchange’s audit trail by
Chicago Board Options Exchange, in open outcry are manually transmitted creating a more robust record of the
Incorporated; Order Granting Approval (e.g., via telephone) by the PAR user stock component of stock-option order
of a Proposed Rule Change Relating to (i.e., a floor broker or PAR Official) on executions on the floor of the
Stock-Option Order Handling the floor to a broker on a stock trading Exchange.12 The Exchange also believes
venue for execution. The Exchange that the proposed rule change will
May 14, 2015. proposes to adopt subparagraph (d) to promote liquidity on the national
I. Introduction Exchange Rule 6.48 (Contract Made on market system by allowing TPHs to
Acceptance of Bid or Offer) to allow more easily use stock-option orders and
On March 16, 2015, Chicago Board TPHs or PAR Officials to electronically more quickly send the stock component
Options Exchange, Incorporated route the stock component of such of a stock-option order to a stock trading
(‘‘CBOE’’ or the ‘‘Exchange’’) filed with stock-option orders to an Exchange- venue.13
the Securities and Exchange designated broker-dealer not affiliated Brokerage Agreement between the
Commission (‘‘Commission’’), pursuant with the Exchange for electronic Clearing Trading Permit Holder and the
to Section 19(b)(1) of the Securities execution at a stock trading venue Exchange-designated Broker-Dealer.
Exchange Act of 1934 (‘‘Act’’ or directly from PAR.7 Proposed Rule Under current Interpretation and Policy
‘‘Exchange Act’’) 1 and Rule 19b–4 6.48(d) also provides that the stock .06(a) to CBOE Rule 6.53C, the stock
thereunder,2 a proposed rule change to component of a stock-option order component of a stock-option order
amend its rules regarding the handling cannot be processed automatically
represented in open outcry may be
and processing of stock-option orders on unless the executing TPH has entered
routed to an Exchange-designated
the Exchange. The proposed rule change into a brokerage agreement with one or
broker-dealer not affiliated with the
was published for comment in the more Exchange-designated broker-
Exchange for electronic execution at a
Federal Register on April 1, 2015.3 The dealer(s) not affiliated with the
stock trading venue as single orders or
Commission received no comments on Exchange that can electronically execute
as paired orders (including with orders
the proposal. This order grants approval the equity order on a stock trading
transmitted from separate PAR
of the proposed rule change. venue.14 Under the proposed rule
workstations), and that the stock-option
II. Description of the Proposed Rule order must comply with the Qualified change, Interpretation and Policy .06 to
Change Contingent Trade (‘‘QCT’’) Exemption of CBOE Rule 6.53C would instead require
The Exchange proposes to amend its Rule 611(a) of Regulation NMS.8 the CTPH that was previously identified
rules regarding the handling and Finally, Rule 6.48(d) would require by the TPH as the ‘‘Designated Give Up’’
processing of stock-option orders TPHs who route the stock component of pursuant to CBOE Rule 6.21 to enter
represented in open outcry on the floor a stock-option order represented in open into a brokerage agreement with the
of the Exchange. As described in more outcry through PAR to comply with non-affiliated Exchange-designated
detail below, the Exchange proposes to Rule 6.53C.06, which governs the broker-dealer(s) before the TPH
amend CBOE Rule 6.48 to allow Trading trading of complex orders, including electronically routes the stock
Permit Holders (‘‘TPHs’’) or PAR stock-option orders, on the CBOE component a of stock-option order to
Officials 4 to electronically route the Hybrid System.9 the Exchange-designated broker-dealer
stock component of a stock-option order The Exchange represents that for any for execution at a stock-trading venue.15
represented in open outcry on the floor order whose stock component is routed The Exchange notes that it is the CTPH,
mstockstill on DSK4VPTVN1PROD with NOTICES
via PAR to an Exchange-designated not the order entry TPH that guarantees
17 17 CFR 200.30–3(a)(12).
5 Id., 10 See Notice, supra note 3 at 17530.
1 15 U.S.C. 78s(b)(1). defining ‘‘PAR workstations.’’
6 Id. 11 Id.
2 17 CFR 240.19b–4. at footnote 5, discussing the obligations of
3 See Securities Exchange Act Release No. 74590 TPHs and CTPHs. 12 Id.
7 See Notice, supra note 3 at 17530. 13 See Notice, supra note 3 at 17532.
(March 26, 2015), 80 FR 17528 (‘‘Notice’’).
4 See Notice, supra note 3 at 17529, defining 8 Id. 14 Id. at 17531.
‘‘PAR Officials.’’ 9 See Proposed Rule 6.48(d). 15 Id.
VerDate Sep<11>2014 23:50 May 19, 2015 Jkt 235001 PO 00000 Frm 00214 Fmt 4703 Sfmt 4703 E:\FR\FM\20MYN1.SGM 20MYN1](https://thefederalregister.org/doc/80_FR_29236/page/4.svg)
Document Created: 2018-02-21 10:29:35
Document Modified: 2018-02-21 10:29:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 29139 |
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