80 FR 34748 - 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 116 (June 17, 2015)
Federal Register Volume 80, Issue 116 (June 17, 2015)
| Page Range | 34748-34751 | |
| FR Document | 2015-14831 |
[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)] [Notices] [Pages 34748-34751] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-14831] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75158; File No. SR-BATS-2015-44] 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. June 11, 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 June 9, 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.\3\ 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 \4\ and Rule 19b-4(f)(2) thereunder,\5\ 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\ The Commission notes that a previous version of the proposal was filed as SR-BATS-2015-41. The proposal was withdrawn on June 9, 2015. \4\ 15 U.S.C. 78s(b)(3)(A)(ii). \5\ 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 its fees and rebates applicable to Members \6\ of the Exchange pursuant to Rule 15.1(a) and (c) (``Fee Schedule'') to: (i) Increase the rebate from $0.0004 per share to $0.0015 per share for orders that yield fee code A, which routes to the Nasdaq Stock Market LLC (``Nasdaq'') and adds liquidity; and (ii) adopt fees for the use of a communication and routing service known as BATS Connect. --------------------------------------------------------------------------- \6\ A 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: (i) Increase the rebate from $0.0004 per share to $0.0015 per share for orders that yield fee code A, which routes to Nasdaq and adds liquidity; and (ii) adopt fees for the use of a communication and routing service known as BATS Connect. Fee Code A In securities priced at or above $1.00, the Exchange currently provides a [[Page 34749]] rebate of $0.0004 per share for Members' orders that yield fee code A, applicable to orders routed to Nasdaq that add liquidity. The Exchange proposes to amend its Fee Schedule to increase this rebate to $0.0015 per share for Members' orders that yield fee code A. The proposed change represents a pass through of the rate that BATS Trading, Inc. (``BATS Trading''), the Exchange's affiliated routing broker-dealer, will be rebated for routing orders to Nasdaq when it does not qualify for a volume tiered rebate. The Exchange notes that the proposed change is in response to Nasdaq's June 2015 fee change where Nasdaq will no longer offer a rebate of $0.0004 per share for orders in select symbols (``Nasdaq's Select Symbol Program'') to its customers, such as BATS Trading, and such orders will be subject to the regular Nasdaq Pricing Schedule.\7\ Accordingly, when BATS Trading routes to Nasdaq in any symbol, it will be rebated a standard rate of $0.0015 per share. BATS Trading will pass through this rate on Nasdaq to the Exchange and the Exchange, in turn, will pass through this rate to its Members. --------------------------------------------------------------------------- \7\ See Nasdaq Equity Trader Alert #2015-70, Nasdaq Ends Access Fee Experiment, available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2015-70. --------------------------------------------------------------------------- BATS Connect On May 26 [sic], 2015, the Exchange filed a proposed rule change with the Commission to adopt a communication and routing service known as BATS Connect.\8\ The Exchange now proposes to adopt fees related to the use of BATS Connect that are equal to the fees charged for an identical service, also called BATS Connect, offered by the Exchange's affiliate, EDGX.\9\ BATS Connect is offered by the Exchange on a voluntary basis in a capacity similar to a vendor. In sum, BATS Connect is a communication service that provides subscribers an additional means to receive market data from and route orders to any destination connected to the Exchange's network. BATS Connect does not provide any advantage to subscribers for connecting to the Exchange's affiliates \10\ as compared to other method of connectivity available to subscribers. The servers of the subscriber need not be located in the same facilities as the Exchange in order to subscribe to BATS Connect. Subscribers may also seek to utilize BATS Connect in the event of a market disruption where other alternative connection methods become unavailable. --------------------------------------------------------------------------- \8\ See file no. SR-BATS-2015-40. \9\ See the EDGX fee schedule available at http://batstrading.com/support/fee_schedule/edgx/. See also Securities Exchange Act Release No. 73780 (December 8, 2014), 79 FR 73942 (December 12, 2014) (SR-EDGX-2014-28) and file no. SR-EDGX-2015-27. \10\ The Exchange's affiliated exchanges are EDGX, EDGA Exchange, Inc. (``EDGA''), and BATS Y-Exchange, Inc. (``BYX''). The Exchange understands that its affiliated exchanges intend to file identical proposed rule changes to adopt the fees for the BATS Connect service with the Commission. The Exchange also notes that its affiliated exchanges have also filed proposed rule changes with the Commission to adopt rules describing the BATS Connect service. --------------------------------------------------------------------------- The Exchange will charge a monthly connectivity fee to subscribers utilizing BATS Connect to route orders to other exchanges and broker- dealers that are connected to the Exchange's network. The amount of the connectivity fee varies based solely on the bandwidth selected by the subscriber. Specifically, the Exchange proposes to charge $350 for 1 Mb, $700 for 5 Mb, $950 for 10 Mb, $1,500 for 25 Mb, $2,500 for 50 Mb, and $3,500 for 100 Mb. BATS Connect would also allow subscribers to receive market data feeds from the exchanges connected to the Exchange's network. In such case, the subscriber would pay the Exchange a connectivity fee, which varies and is based solely on the amount of bandwidth required to transmit the selected data product to the subscriber. The proposed connectivity fees are set forth in the Exhibit 5 attached hereto and range from no charge to $11,500 based on the market data product the subscriber selects. The Exchange also proposes to adopt a discounted fee of $4,160 per month for subscribers who purchase connectivity to a bundle of select market data products. The following market data products would be included in the bundle: UQDF/UTDF/OMDF, CQS/CTS, Nasdaq TotalView, Nasdaq BX TotalView, Nasdaq PSX TotalView, NYSE ArcaBook, NYSE MKT OpenBook Ultra, and BBS/TTDS. Absent the discount, a subscriber purchasing connectivity through BATS Connect for each of these market data products would pay a total monthly fee of $5,200. As proposed, a subscriber who purchases connectivity to each of the above market data products would be charged a monthly fee of $4,160, which represents a 20% discount. The subscribers would pay any fees charged by the exchange providing the market data feed directly to that exchange. The Exchange notes that it will not charge a fee to subscribers utilizing BATS Connect to route orders to or receive market data products from the Exchange's affiliates, EDGX, EDGA, and BYX. BATS Connect provides subscribers a means to access exchanges and market centers on the Exchange's network. In all cases, BATS Connect subscribers would be continue to be liable for the necessary fees charged by that exchange or market center, including any required connectivity fees. Market participants who chose a method other than BATS Connect to connect to another exchange or market center would also pay any required connectivity fees directly to that exchange or market center. Likewise, BATS Connect subscribers would be liable for any connectivity fees charged by the Exchange's affiliate. Implementation Date The Exchange proposes to implement these amendments to its Fee Schedule immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,\11\ in general, and furthers the objectives of Section 6(b)(4),\12\ 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 rates are equitable and non-discriminatory in that they apply uniformly to all Members. 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. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f. \12\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Fee Code A The Exchange believes that its proposal to increase the pass through rebate for Members' orders that yield fee code A from $0.0004 to $0.0015 per share represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. Under Nasdaq's Select Symbol Program, Nasdaq provided BATS Trading a rebate of $0.0004 per share for orders executed in select symbols, which BATS Trading passed through to the Exchange and the Exchange passed through to its [[Page 34750]] Members, not only for orders routed in select symbols but in all securities. In June 2015, Nasdaq will terminate its Select Symbol Program, thereby increasing the rebate it provides its customers, such as BATS Trading, in select symbols from a rebate of $0.0004 per share to its standard rebate of $0.0015 per share for orders that are routed to Nasdaq.\13\ Therefore, the Exchange believes that the proposed change in fee code A from a rebate of $0.0004 per share to a rebate of $0.0015 per share is equitable and reasonable because it accounts for the pricing changes on Nasdaq. In addition, the proposal allows the Exchange to continue to charge its Members a pass-through rate for orders that are routed to Nasdaq. The Exchange notes that routing through BATS Trading is voluntary. Lastly, the Exchange also believes that the proposed amendment is non-discriminatory because it applies uniformly to all Members. --------------------------------------------------------------------------- \13\ See supra note 6. --------------------------------------------------------------------------- BATS Connect The Exchange also believes that its proposal 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 its facilities. First, the Exchange will charge a connectivity fee to subscribers utilizing BATS Connect to route orders to other exchanges and market centers that are connected to the Exchange's network, which varies based solely on the amount of bandwidth selected by the subscriber. The amounts of the connectivity fees are also reasonable as compared to similar fees charged by other exchanges. For purposes of order routing, the Exchange proposes to charge $350 for 1 Mb, $700 for 5 Mb, $950 for 10 Mb, $1,500 for 25 Mb, $2,500 for 50 Mb, and $3,500 for 100 Mb. The New York Stock Exchange, Inc. (``NYSE'') currently charges $300 for 1 Mb, $700 for 5 Mb, $900 for 10 Mb, $1,500 for 25 Mb, $2,000 for 50 Mb, and $2,600 for 100 Mb.\15\ The Exchange notes that, overall, the connectivity fee for routing of orders to other market centers proposed by the Exchange is similar to that charged by the NYSE. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b)(4). \15\ See NYSE's SFTI Americas Product and Service List available at http://www.nyxdata.com/docs/connectivity. --------------------------------------------------------------------------- Second, with regard to utilizing BATS Connect to receive market data products from other exchanges, the Exchange would only charge subscribers a connectivity fee, the amount of which is based solely on the amount of bandwidth required to transmit that specific data product to the subscribers. The amounts of the connectivity fees are also reasonable as compared to similar fees charged by other exchanges. For example, for market data connectivity, the Nasdaq Stock Market LLC (``Nasdaq'') charges $1,412 per month for CQS/CTS data feed, and the Exchange proposes to charge $1,000 per month connectivity for CQS/CTS data feed.\16\ The Exchange notes that, overall, the connectivity fee for receipt of other market centers' data feed proposed by the Exchange is similar to that charged by Nasdaq. --------------------------------------------------------------------------- \16\ See Nasdaq Rule 7034 (setting forth Nasdaq's connectivity fees for receipt of third party market data products). --------------------------------------------------------------------------- The Exchange believes it is reasonable to offer such discounted pricing to subscribers who purchase connectivity to a bundle of market data products as it would enable them to reduce their overall connectivity costs for the receipt of market data. As stated above, BATS Connect is offered and purchased on a voluntary basis and subscribers can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. Moreover, the Exchange believes the proposed fees are reasonable and equitable because they continue to be based on the Exchange's costs to cover the amount of bandwidth required to provide connectivity to the select bundle of data feeds. The proposed fees will continue to allow the Exchange to recoup this cost, while providing subscribers with an alternative means to connect to the select bundle of data feeds at a discounted rate. The subscribers would pay any fees: (i) charged by the exchange providing the market data feed directly to that exchange (ii) charged by a market center to which they routed an order and an execution occurred directly to that market center. The Exchange itself would not charge any additional fees.\17\ BATS Connect is offered and purchased on a voluntary basis, in that neither the Exchange nor subscribers are required by any rule or regulation to make this product available. Accordingly, subscribers can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. --------------------------------------------------------------------------- \17\ The Exchange's rules and fees would not address the fees or manner of operation of any destination to which the subscriber asked that an order be routed. --------------------------------------------------------------------------- Moreover, the Exchange believes the proposed fees are reasonable and equitable because they are based on the Exchange's costs to cover hardware, installation, testing and connection, as well as expenses involved in maintaining and managing the service. The proposed fees allow the Exchange to recoup these costs, while providing subscribers with an alternative means to connect to other exchange and market centers. The Exchange believes that the proposed fees are reasonable and equitable in that they reflect the costs and the benefit of providing alternative connectivity. The Exchange also believes it is equitable and reasonable to provide BATS Connect to subscribers for no charge to route orders to or receive market data products from the Exchange's affiliates. BATS Connect provides subscribers a means to access exchanges and market centers on the Exchange's network. In all cases, BATS Connect subscribers would be continue to be liable for the necessary fees charged by the Exchange, its affiliate, or another exchange or market center, including any required connectivity fees. As stated above, BATS Connect is offered and purchased on a voluntary basis, and subscribers and market participants may choose an alternative method to connect to the Exchange, its affiliates, or another exchange or market center connected to the Exchange's network. Such other services may also offer at no charge connectivity to certain exchanges or a group of exchanges.\18\ Therefore, the Exchange believes that the [sic] providing BATS Connect to subscribers at no charge to route orders to or receive market data products from the Exchange's affiliates is reasonable and equitable as they will continue to be liable to the Exchange or its affiliate for any required connectivity fees. --------------------------------------------------------------------------- \18\ See NYSE's SFTI Americas Product and Service List available at http://www.nyxdata.com/docs/connectivity (offering at no charge connectivity to the NYSE, NYSE MKT LLC, and NYSE Arca, Inc.). --------------------------------------------------------------------------- Lastly, the Exchange also believes that the proposed amendments to its fee schedule are non-discriminatory because they will apply uniformly to all subscribers. All subscribers that voluntarily select various service options will be charged the same amount for the same services. All subscribers have the option to select any connectivity option, and there is no differentiation among subscribers with regard to the fees charged for the service. Further, the benefits of selecting such services are the same for all subscribers, irrespective of whether their servers are located in the same facility as the Exchange. [[Page 34751]] (B) Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes its proposed amendments to its Fee Schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. Fee Code A The Exchange believes that its proposal to pass through a rebate of $0.0015 per share for Members' orders that yield fee code A would increase intermarket competition because it offers customers an alternative means to route to Nasdaq for a similar rate as entering orders in certain symbols on Nasdaq directly. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members. BATS Connect The Exchange does not believe the proposed fees for BATS Connect will result in any burden on competition. The proposed rule change is designed to provide subscribers with an alternative means to access other market centers on the Exchange's network if they choose or in the event of a market disruption where other alternative connection methods become unavailable. BATS Connect is not the exclusive method to connect to these market centers and subscribers may utilize alternative methods to connect to the product if they believe the Exchange's proposed pricing is unreasonable or otherwise. Therefore, the Exchange does not believe the proposed rule change will have any effect on 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 \19\ and paragraph (f) of Rule 19b-4 thereunder.\20\ At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(3)(A). \20\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-BATS-2015-44 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-BATS-2015-44. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing 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 Number SR-BATS-2015-44 and should be submitted on or before July 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-14831 Filed 6-16-15; 8:45 am] BILLING CODE 8011-01-P
![34748 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
Therefore, the Exchange does not change that are filed with the of the Act 4 and Rule 19b–4(f)(2)
believe the proposed rule change will Commission, and all written thereunder,5 which renders the
have any effect on competition. communications relating to the proposed rule change effective upon
proposed rule change between the filing with the Commission. The
(C) Self-Regulatory Organization’s
Commission and any person, other than Commission is publishing this notice to
Statement on Comments on the
those that may be withheld from the solicit comments on the proposed rule
Proposed Rule Change Received From
public in accordance with the change from interested persons.
Members, Participants or Others
provisions of 5 U.S.C. 552, will be
The Exchange has not solicited, and I. Self-Regulatory Organization’s
available for Web site viewing and
does not intend to solicit, comments on Statement of the Terms of Substance of
printing in the Commission’s Public
this proposed rule change. The the Proposed Rule Change
Reference Room, 100 F Street NE.,
Exchange has not received any Washington, DC 20549, on official The Exchange filed a proposal to
unsolicited written comments from business days between the hours of amend its fees and rebates applicable to
Members or other interested parties. 10:00 a.m. and 3:00 p.m. Copies of the Members 6 of the Exchange pursuant to
filing will also be available for Rule 15.1(a) and (c) (‘‘Fee Schedule’’) to:
III. Date of Effectiveness of the
inspection and copying at the principal (i) Increase the rebate from $0.0004 per
Proposed Rule Change and Timing for
office of the Exchange. All comments share to $0.0015 per share for orders
Commission Action
received will be posted without change; that yield fee code A, which routes to
The foregoing rule change has become the Commission does not edit personal the Nasdaq Stock Market LLC
effective pursuant to Section 19(b)(3)(A) identifying information from (‘‘Nasdaq’’) and adds liquidity; and (ii)
of the Act 19 and paragraph (f) of Rule submissions. You should submit only adopt fees for the use of a
19b–4 thereunder.20 At any time within information that you wish to make communication and routing service
60 days of the filing of the proposed rule available publicly. All submissions known as BATS Connect.
change, the Commission summarily may should refer to File Number SR–BYX– The text of the proposed rule change
temporarily suspend such rule change if 2015–28 and should be submitted on or is available at the Exchange’s Web site
it appears to the Commission that such before July 8, 2015. at www.batstrading.com, at the
action is necessary or appropriate in the principal office of the Exchange, and at
For the Commission, by the Division of
public interest, for the protection of the Commission’s Public Reference
Trading and Markets, pursuant to delegated
investors, or otherwise in furtherance of authority.21 Room.
the purposes of the Act. Robert W. Errett, II. Self-Regulatory Organization’s
IV. Solicitation of Comments Deputy Secretary. Statement of the Purpose of, and
Interested persons are invited to [FR Doc. 2015–14832 Filed 6–16–15; 8:45 am] Statutory Basis for, the Proposed Rule
submit written data, views, and BILLING CODE 8011–01–P Change
arguments concerning the foregoing, In its filing with the Commission, the
including whether the proposed rule Exchange included statements
change is consistent with the Act. SECURITIES AND EXCHANGE concerning the purpose of and basis for
Comments may be submitted by any of COMMISSION the proposed rule change and discussed
the following methods: [Release No. 34–75158; File No. SR–BATS– any comments it received on the
2015–44] proposed rule change. The text of these
Electronic Comments
statements may be examined at the
• Use the Commission’s Internet Self-Regulatory Organizations; BATS places specified in Item IV below. The
comment form (http://www.sec.gov/ Exchange, Inc.; Notice of Filing and Exchange has prepared summaries, set
rules/sro.shtml); or Immediate Effectiveness of a Proposed forth in Sections A, B, and C below, of
• Send an email to rule-comments@ Rule Change Related to Fees for Use the most significant parts of such
sec.gov. Please include File Number SR– of BATS Exchange, Inc. statements.
BYX–2015–28 on the subject line.
June 11, 2015. (A) Self-Regulatory Organization’s
Paper Comments Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and
• Send paper comments in triplicate Securities Exchange Act of 1934 (the Statutory Basis for, the Proposed Rule
to Brent J. Fields, Secretary, Securities ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change
and Exchange Commission, 100 F Street notice is hereby given that on June 9,
2015, BATS Exchange, Inc. (the 1. Purpose
NE., Washington, DC 20549–1090.
All submissions should refer to File ‘‘Exchange’’ or ‘‘BATS’’) filed with the The Exchange proposes to: (i) Increase
Number SR–BYX–2015–28. This file Securities and Exchange Commission the rebate from $0.0004 per share to
number should be included on the (‘‘Commission’’) the proposed rule $0.0015 per share for orders that yield
subject line if email is used. To help the change as described in Items I, II and III fee code A, which routes to Nasdaq and
Commission process and review your below, which Items have been prepared adds liquidity; and (ii) adopt fees for the
comments more efficiently, please use by the Exchange.3 The Exchange has use of a communication and routing
only one method. The Commission will designated the proposed rule change as service known as BATS Connect.
one establishing or changing a member
asabaliauskas on DSK5VPTVN1PROD with NOTICES
post all comments on the Commission’s Fee Code A
Internet Web site (http://www.sec.gov/ due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii) In securities priced at or above $1.00,
rules/sro.shtml). Copies of the
the Exchange currently provides a
submission, all subsequent 21 17 CFR 200.30–3(a)(12).
amendments, all written statements 1 15 U.S.C. 78s(b)(1). 4 15U.S.C. 78s(b)(3)(A)(ii).
with respect to the proposed rule 2 17 CFR 240.19b–4. 5 17CFR 240.19b–4(f)(2).
3 The Commission notes that a previous version 6 A Member is defined as ‘‘any registered broker
19 15 U.S.C. 78s(b)(3)(A). of the proposal was filed as SR–BATS–2015–41. or dealer that has been admitted to membership in
20 17 CFR 240.19b–4(f). The proposal was withdrawn on June 9, 2015. the Exchange.’’ See Exchange Rule 1.5(n).
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34749
rebate of $0.0004 per share for Members’ other method of connectivity available subscribers a means to access exchanges
orders that yield fee code A, applicable to subscribers. The servers of the and market centers on the Exchange’s
to orders routed to Nasdaq that add subscriber need not be located in the network. In all cases, BATS Connect
liquidity. The Exchange proposes to same facilities as the Exchange in order subscribers would be continue to be
amend its Fee Schedule to increase this to subscribe to BATS Connect. liable for the necessary fees charged by
rebate to $0.0015 per share for Members’ Subscribers may also seek to utilize that exchange or market center,
orders that yield fee code A. The BATS Connect in the event of a market including any required connectivity
proposed change represents a pass disruption where other alternative fees. Market participants who chose a
through of the rate that BATS Trading, connection methods become method other than BATS Connect to
Inc. (‘‘BATS Trading’’), the Exchange’s unavailable. connect to another exchange or market
affiliated routing broker-dealer, will be The Exchange will charge a monthly center would also pay any required
rebated for routing orders to Nasdaq connectivity fee to subscribers utilizing connectivity fees directly to that
when it does not qualify for a volume BATS Connect to route orders to other exchange or market center. Likewise,
tiered rebate. The Exchange notes that exchanges and broker-dealers that are BATS Connect subscribers would be
the proposed change is in response to connected to the Exchange’s network. liable for any connectivity fees charged
Nasdaq’s June 2015 fee change where The amount of the connectivity fee by the Exchange’s affiliate.
Nasdaq will no longer offer a rebate of varies based solely on the bandwidth
$0.0004 per share for orders in select Implementation Date
selected by the subscriber. Specifically,
symbols (‘‘Nasdaq’s Select Symbol the Exchange proposes to charge $350 The Exchange proposes to implement
Program’’) to its customers, such as for 1 Mb, $700 for 5 Mb, $950 for 10 Mb, these amendments to its Fee Schedule
BATS Trading, and such orders will be $1,500 for 25 Mb, $2,500 for 50 Mb, and immediately.
subject to the regular Nasdaq Pricing $3,500 for 100 Mb. 2. Statutory Basis
Schedule.7 Accordingly, when BATS BATS Connect would also allow
Trading routes to Nasdaq in any symbol, subscribers to receive market data feeds The Exchange believes that the
it will be rebated a standard rate of from the exchanges connected to the proposed rule change is consistent with
$0.0015 per share. BATS Trading will Exchange’s network. In such case, the the objectives of Section 6 of the Act,11
pass through this rate on Nasdaq to the subscriber would pay the Exchange a in general, and furthers the objectives of
Exchange and the Exchange, in turn, connectivity fee, which varies and is Section 6(b)(4),12 in particular, as it is
will pass through this rate to its based solely on the amount of designed to provide for the equitable
Members. bandwidth required to transmit the allocation of reasonable dues, fees and
selected data product to the subscriber. other charges among its Members and
BATS Connect other persons using its facilities. The
The proposed connectivity fees are set
On May 26 [sic], 2015, the Exchange forth in the Exhibit 5 attached hereto Exchange also notes that it operates in
filed a proposed rule change with the and range from no charge to $11,500 a highly-competitive market in which
Commission to adopt a communication based on the market data product the market participants can readily direct
and routing service known as BATS subscriber selects. order flow to competing venues if they
Connect.8 The Exchange now proposes The Exchange also proposes to adopt deem fee levels at a particular venue to
to adopt fees related to the use of BATS a discounted fee of $4,160 per month for be excessive. The proposed rule change
Connect that are equal to the fees subscribers who purchase connectivity reflects a competitive pricing structure
charged for an identical service, also to a bundle of select market data designed to incent market participants
called BATS Connect, offered by the products. The following market data to direct their order flow to the
Exchange’s affiliate, EDGX.9 BATS products would be included in the Exchange. The Exchange believes that
Connect is offered by the Exchange on bundle: UQDF/UTDF/OMDF, CQS/CTS, the proposed rates are equitable and
a voluntary basis in a capacity similar Nasdaq TotalView, Nasdaq BX non-discriminatory in that they apply
to a vendor. In sum, BATS Connect is TotalView, Nasdaq PSX TotalView, uniformly to all Members. The
a communication service that provides NYSE ArcaBook, NYSE MKT OpenBook Exchange believes the fees and credits
subscribers an additional means to Ultra, and BBS/TTDS. Absent the remain competitive with those charged
receive market data from and route discount, a subscriber purchasing by other venues and therefore continue
orders to any destination connected to connectivity through BATS Connect for to be reasonable and equitably allocated
the Exchange’s network. BATS Connect each of these market data products to Members.
does not provide any advantage to would pay a total monthly fee of $5,200.
subscribers for connecting to the Fee Code A
As proposed, a subscriber who
Exchange’s affiliates 10 as compared to purchases connectivity to each of the The Exchange believes that its
above market data products would be proposal to increase the pass through
7 See Nasdaq Equity Trader Alert #2015–70,
charged a monthly fee of $4,160, which rebate for Members’ orders that yield fee
Nasdaq Ends Access Fee Experiment, available at code A from $0.0004 to $0.0015 per
http://www.nasdaqtrader.com/ represents a 20% discount. The
TraderNews.aspx?id=ETA2015-70. subscribers would pay any fees charged share represents an equitable allocation
8 See file no. SR–BATS–2015–40.
by the exchange providing the market of reasonable dues, fees, and other
9 See the EDGX fee schedule available at http://
data feed directly to that exchange. charges among Members and other
batstrading.com/support/fee_schedule/edgx/. See
The Exchange notes that it will not persons using its facilities. Under
also Securities Exchange Act Release No. 73780
asabaliauskas on DSK5VPTVN1PROD with NOTICES
charge a fee to subscribers utilizing Nasdaq’s Select Symbol Program,
(December 8, 2014), 79 FR 73942 (December 12,
2014) (SR–EDGX–2014–28) and file no. SR–EDGX– BATS Connect to route orders to or Nasdaq provided BATS Trading a rebate
2015–27. receive market data products from the of $0.0004 per share for orders executed
10 The Exchange’s affiliated exchanges are EDGX,
Exchange’s affiliates, EDGX, EDGA, and in select symbols, which BATS Trading
EDGA Exchange, Inc. (‘‘EDGA’’), and BATS Y- passed through to the Exchange and the
Exchange, Inc. (‘‘BYX’’). The Exchange understands BYX. BATS Connect provides
that its affiliated exchanges intend to file identical
Exchange passed through to its
proposed rule changes to adopt the fees for the have also filed proposed rule changes with the
11 15 U.S.C. 78f.
BATS Connect service with the Commission. The Commission to adopt rules describing the BATS
Exchange also notes that its affiliated exchanges Connect service. 12 15 U.S.C. 78f(b)(4).
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![34750 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
Members, not only for orders routed in bandwidth required to transmit that well as expenses involved in
select symbols but in all securities. In specific data product to the subscribers. maintaining and managing the service.
June 2015, Nasdaq will terminate its The amounts of the connectivity fees are The proposed fees allow the Exchange
Select Symbol Program, thereby also reasonable as compared to similar to recoup these costs, while providing
increasing the rebate it provides its fees charged by other exchanges. For subscribers with an alternative means to
customers, such as BATS Trading, in example, for market data connectivity, connect to other exchange and market
select symbols from a rebate of $0.0004 the Nasdaq Stock Market LLC centers. The Exchange believes that the
per share to its standard rebate of (‘‘Nasdaq’’) charges $1,412 per month proposed fees are reasonable and
$0.0015 per share for orders that are for CQS/CTS data feed, and the equitable in that they reflect the costs
routed to Nasdaq.13 Therefore, the Exchange proposes to charge $1,000 per
and the benefit of providing alternative
Exchange believes that the proposed month connectivity for CQS/CTS data
connectivity.
change in fee code A from a rebate of feed.16 The Exchange notes that, overall,
$0.0004 per share to a rebate of $0.0015 the connectivity fee for receipt of other The Exchange also believes it is
per share is equitable and reasonable market centers’ data feed proposed by equitable and reasonable to provide
because it accounts for the pricing the Exchange is similar to that charged BATS Connect to subscribers for no
changes on Nasdaq. In addition, the by Nasdaq. charge to route orders to or receive
proposal allows the Exchange to The Exchange believes it is reasonable market data products from the
continue to charge its Members a pass- to offer such discounted pricing to Exchange’s affiliates. BATS Connect
through rate for orders that are routed to subscribers who purchase connectivity provides subscribers a means to access
Nasdaq. The Exchange notes that to a bundle of market data products as exchanges and market centers on the
routing through BATS Trading is it would enable them to reduce their Exchange’s network. In all cases, BATS
voluntary. Lastly, the Exchange also overall connectivity costs for the receipt Connect subscribers would be continue
believes that the proposed amendment of market data. As stated above, BATS to be liable for the necessary fees
is non-discriminatory because it applies Connect is offered and purchased on a
charged by the Exchange, its affiliate, or
uniformly to all Members. voluntary basis and subscribers can
another exchange or market center,
discontinue use at any time and for any
BATS Connect reason, including due to an assessment including any required connectivity
of the reasonableness of fees charged. fees. As stated above, BATS Connect is
The Exchange also believes that its offered and purchased on a voluntary
proposal is consistent with Section Moreover, the Exchange believes the
proposed fees are reasonable and basis, and subscribers and market
6(b)(4) of the Act,14 in that it provides
equitable because they continue to be participants may choose an alternative
for the equitable allocation of reasonable
based on the Exchange’s costs to cover method to connect to the Exchange, its
dues, fees and other charges among
members and other persons using its the amount of bandwidth required to affiliates, or another exchange or market
facilities. First, the Exchange will charge provide connectivity to the select center connected to the Exchange’s
a connectivity fee to subscribers bundle of data feeds. The proposed fees network. Such other services may also
utilizing BATS Connect to route orders will continue to allow the Exchange to offer at no charge connectivity to certain
to other exchanges and market centers recoup this cost, while providing exchanges or a group of exchanges.18
that are connected to the Exchange’s subscribers with an alternative means to Therefore, the Exchange believes that
network, which varies based solely on connect to the select bundle of data the [sic] providing BATS Connect to
the amount of bandwidth selected by feeds at a discounted rate. subscribers at no charge to route orders
the subscriber. The amounts of the The subscribers would pay any fees: to or receive market data products from
connectivity fees are also reasonable as (i) charged by the exchange providing the Exchange’s affiliates is reasonable
the market data feed directly to that and equitable as they will continue to be
compared to similar fees charged by
exchange (ii) charged by a market center
other exchanges. For purposes of order liable to the Exchange or its affiliate for
to which they routed an order and an
routing, the Exchange proposes to any required connectivity fees.
execution occurred directly to that
charge $350 for 1 Mb, $700 for 5 Mb, Lastly, the Exchange also believes that
market center. The Exchange itself
$950 for 10 Mb, $1,500 for 25 Mb, the proposed amendments to its fee
would not charge any additional fees.17
$2,500 for 50 Mb, and $3,500 for 100
BATS Connect is offered and purchased schedule are non-discriminatory
Mb. The New York Stock Exchange, Inc.
on a voluntary basis, in that neither the because they will apply uniformly to all
(‘‘NYSE’’) currently charges $300 for 1
Exchange nor subscribers are required subscribers. All subscribers that
Mb, $700 for 5 Mb, $900 for 10 Mb,
by any rule or regulation to make this voluntarily select various service
$1,500 for 25 Mb, $2,000 for 50 Mb, and
product available. Accordingly, options will be charged the same
$2,600 for 100 Mb.15 The Exchange
subscribers can discontinue use at any amount for the same services. All
notes that, overall, the connectivity fee
time and for any reason, including due subscribers have the option to select any
for routing of orders to other market
to an assessment of the reasonableness connectivity option, and there is no
centers proposed by the Exchange is
of fees charged. differentiation among subscribers with
similar to that charged by the NYSE. Moreover, the Exchange believes the
Second, with regard to utilizing BATS regard to the fees charged for the
proposed fees are reasonable and service. Further, the benefits of selecting
Connect to receive market data products equitable because they are based on the
from other exchanges, the Exchange such services are the same for all
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Exchange’s costs to cover hardware,
would only charge subscribers a subscribers, irrespective of whether
installation, testing and connection, as
connectivity fee, the amount of which is their servers are located in the same
based solely on the amount of 16 See Nasdaq Rule 7034 (setting forth Nasdaq’s facility as the Exchange.
connectivity fees for receipt of third party market
13 See supra note 6. data products).
14 15 18 See NYSE’s SFTI Americas Product and Service
U.S.C. 78f(b)(4). 17 The Exchange’s rules and fees would not
15 See NYSE’s SFTI Americas Product and Service address the fees or manner of operation of any List available at http://www.nyxdata.com/docs/
List available at http://www.nyxdata.com/docs/ destination to which the subscriber asked that an connectivity (offering at no charge connectivity to
connectivity. order be routed. the NYSE, NYSE MKT LLC, and NYSE Arca, Inc.).
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34751
(B) Self-Regulatory Organization’s III. Date of Effectiveness of the inspection and copying at the principal
Statement on Burden on Competition Proposed Rule Change and Timing for office of the Exchange. All comments
Commission Action received will be posted without change;
The Exchange believes its proposed
amendments to its Fee Schedule would The foregoing rule change has become the Commission does not edit personal
not impose any burden on competition effective pursuant to Section 19(b)(3)(A) identifying information from
that is not necessary or appropriate in of the Act 19 and paragraph (f) of Rule submissions. You should submit only
furtherance of the purposes of the Act. 19b–4 thereunder.20 At any time within information that you wish to make
The Exchange does not believe that the 60 days of the filing of the proposed rule available publicly. All submissions
proposed change represents a significant change, the Commission summarily may should refer to File Number SR–BATS–
departure from previous pricing offered temporarily suspend such rule change if 2015–44 and should be submitted on or
by the Exchange or pricing offered by it appears to the Commission that such before July 8, 2015.
the Exchange’s competitors. action is necessary or appropriate in the For the Commission, by the Division of
Additionally, Members may opt to public interest, for the protection of Trading and Markets, pursuant to delegated
disfavor the Exchange’s pricing if they investors, or otherwise in furtherance of authority.21
believe that alternatives offer them the purposes of the Act. Robert W. Errett,
better value. Accordingly, the Exchange IV. Solicitation of Comments Deputy Secretary.
does not believe that the proposed [FR Doc. 2015–14831 Filed 6–16–15; 8:45 am]
change will impair the ability of Interested persons are invited to
BILLING CODE 8011–01–P
Members or competing venues to submit written data, views, and
arguments concerning the foregoing,
maintain their competitive standing in
including whether the proposed rule SECURITIES AND EXCHANGE
the financial markets.
change is consistent with the Act. COMMISSION
Fee Code A Comments may be submitted by any of
The Exchange believes that its the following methods:
[Release No. 34–75148; File No. SR–
proposal to pass through a rebate of Electronic Comments NYSEMKT–2015–27]
$0.0015 per share for Members’ orders • Use the Commission’s Internet
that yield fee code A would increase comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE
intermarket competition because it rules/sro.shtml); or MKT LLC; Order Approving Proposed
offers customers an alternative means to • Send an email to rule-comments@ Rule Change To Amend the Sixth
route to Nasdaq for a similar rate as sec.gov. Please include File Number SR– Amended and Restated Operating
entering orders in certain symbols on BATS–2015–44 on the subject line. Agreement of the Exchange
Nasdaq directly. The Exchange believes
Paper Comments June 11, 2015.
that its proposal would not burden
intramarket competition because the • Send paper comments in triplicate I. Introduction
proposed rate would apply uniformly to to Brent J. Fields, Secretary, Securities On April 17, 2015, NYSE MKT LLC
all Members. and Exchange Commission, 100 F Street (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
NE., Washington, DC 20549–1090. with the Securities and Exchange
BATS Connect
All submissions should refer to File Commission (‘‘Commission’’), pursuant
The Exchange does not believe the Number SR–BATS–2015–44. This file to Section 19(b)(1) 1 of the Securities
proposed fees for BATS Connect will number should be included on the Exchange Act of 1934 (‘‘Act’’),2 and
result in any burden on competition. subject line if email is used. To help the Rule 19b–4 thereunder,3 a proposed rule
The proposed rule change is designed to Commission process and review your change to amend the Sixth Amended
provide subscribers with an alternative comments more efficiently, please use and Restated Operating Agreement
means to access other market centers on only one method. The Commission will (‘‘Operating Agreement’’) of the
the Exchange’s network if they choose post all comments on the Commission’s Exchange. The proposed rule change
or in the event of a market disruption Internet Web site (http://www.sec.gov/ was published for comment in the
where other alternative connection rules/sro.shtml). Copies of the Federal Register on May 4, 2015.4 The
methods become unavailable. BATS submission, all subsequent Commission received no comment
Connect is not the exclusive method to amendments, all written statements letters on the proposed rule change.
connect to these market centers and with respect to the proposed rule This order approves the proposed rule
subscribers may utilize alternative change that are filed with the change.
methods to connect to the product if Commission, and all written
they believe the Exchange’s proposed communications relating to the II. Description of the Proposal
pricing is unreasonable or otherwise. proposed rule change between the NYSE MKT proposes to amend the
Therefore, the Exchange does not Commission and any person, other than Exchange’s Operating Agreement to (1)
believe the proposed rule change will those that may be withheld from the establish a Regulatory Oversight
have any effect on competition. public in accordance with the Committee (‘‘ROC’’), and (2) remove the
(C) Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be requirement that the independent
Statement on Comments on the available for Web site viewing and directors who make up the majority of
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Proposed Rule Change Received From printing in the Commission’s Public the board of directors of the Exchange
Members, Participants or Others Reference Room, 100 F Street NE., (‘‘Board’’) also be directors of
Washington, DC 20549, on official
The Exchange has not solicited, and business days between the hours of 21 17 CFR 200.30–3(a)(12).
does not intend to solicit, comments on 10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1).
this proposed rule change. The filing will also be available for 2 15 U.S.C. 78a.
Exchange has not received any 3 17 CFR 240.19b–4.
unsolicited written comments from 19 15 U.S.C. 78s(b)(3)(A). 4 See Securities Exchange Act Release No. 74825
Members or other interested parties. 20 17 CFR 240.19b–4(f). (April 28, 2015), 80 FR 25341 (‘‘Notice’’).
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Document Created: 2015-12-15 14:23:13
Document Modified: 2015-12-15 14:23:13
| 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 34748 |
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