80 FR 45566 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Period of the BATS Exchange, Inc. Supplemental Competitive Liquidity Provider Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 146 (July 30, 2015)

[Federal Register Volume 80, Number 146 (Thursday, July 30, 2015)]
[Notices]
[Pages 45566-45568]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-18636]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75518; File No. SR-BATS-2015-55


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend 
the Pilot Period of the BATS Exchange, Inc. Supplemental Competitive 
Liquidity Provider Program

July 24, 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 July 23, 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 and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to extend the pilot period for the 
Exchange's Supplemental Competitive Liquidity Provider Program (the 
``Program''), which is currently set to expire on July 28, 2015, for 3 
months, to expire on October 28, 2015.
    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
Background
    On August 30, 2011, the Exchange received approval of rules 
applicable to the qualification, listing and delisting of securities of 
issuers on the Exchange.\5\ More recently, the Exchange received 
approval to operate a pilot program that is designed to incentivize 
certain Market Makers \6\ registered with the Exchange as ETP CLPs, as 
defined in Interpretation and Policy .03 to Rule 11.8, to enhance 
liquidity on the Exchange in certain ETPs \7\ listed on the Exchange 
and thereby qualify to receive part of a daily rebate as part of the 
Program under Interpretation and Policy .03 to Rule 11.8.\8\
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    \5\ See Securities Exchange Act Release No. 65225 (August 30, 
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
    \6\ As defined in BATS Rules, the term ``Market Maker'' means a 
Member that acts a as a market maker pursuant to chapter XI of BATS 
Rules.
    \7\ ETP is defined in Interpretation and Policy .03(b)(4) to 
Rule 11.8.
    \8\ See Securities Exchange Act Release No. 72692 (July 28, 
2014), 79 FR 44908 (August 1, 2014) (SR-BATS-2014-022) (``CLP 
Approval Order'').
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    The Program was approved by the Commission on a pilot basis running 
one-year from the date of implementation.\9\ The Commission approved 
the Program on July 28, 2014.\10\ The Exchange implemented the Program 
on July 28, 2014 and the pilot period for the Program is scheduled to 
end on July 28, 2015.
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    \9\ See id at 44909.
    \10\ Id.
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Proposal To Extend the Operation of the Program
    The Exchange established the Program in order to enhance liquidity 
on the Exchange in certain ETPs listed on the Exchange (and thereby 
enhance the Exchange's ability to compete as a listing venue) by 
providing a mechanism by which ETP CLPs compete for part of a daily 
quoting incentive on the basis of providing the most aggressive quotes 
with the greatest amount of size. Such competition has the ability to 
reduce spreads, facilitate the price discovery process, and reduce 
costs for investors trading in such securities, thereby promoting 
capital formation and helping the Exchange to compete as a listing 
venue. The

[[Page 45567]]

Exchange believes that extending the pilot is appropriate because it 
will allow the Exchange and the Commission additional time to analyze 
data regarding the Program that the Exchange has committed to 
provide.\11\ As such, the Exchange believes that it is appropriate to 
extend the current operation of the Program. Further information 
related to the Program including data can be found on the Exchange's 
Web site.\12\ Through this filing, the Exchange seeks to extend the 
current pilot period of the Program until October 28, 2015.
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    \11\ See CLP Approval Order, supra note 8 at 44913.
    \12\ See http://www.bats.com/us/equities/listings/clp_reports/.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of section 6(b) of the Act.\13\ In particular, 
the Exchange believes the proposed change furthers the objectives of 
section 6(b)(5) of the Act,\14\ in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that 
extending the pilot period for the Program is consistent with these 
principles because the Program is reasonably designed to enhance quote 
competition, improve liquidity in securities listed on the Exchange, 
support the quality of price discovery, promote market transparency, 
and increase competition for listings and trade executions, while 
reducing spreads and transaction costs in such securities. Maintaining 
and increasing liquidity in Exchange-listed securities will help raise 
investors' confidence in the fairness of the market and their 
transactions. The extension of the pilot period will allow the 
Commission and the Exchange to continue to monitor the Program for its 
potential effects on public price discovery, and on the broader market 
structure.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
extends an established pilot program for 3 months, thus allowing the 
Program to enhance competition in both the listings market and in 
competition for market makers. The Program will continue to promote 
competition in the listings market by providing issuers with a vehicle 
for paying the Exchange additional fees in exchange for incentivizing 
tighter spreads and deeper liquidity in listed securities and allow the 
Exchange to continue to compete with similar programs at Nasdaq Stock 
Market LLC \15\ and NYSE Arca Equities, Inc. \16\
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    \15\ See Securities Exchange Act Release No. 69195 (March 20, 
2013), 78 FR 18393 (March 26, 2013) (SR-NASDAQ-2012-137).
    \16\ See Securities Exchange Act Release No. 69335 (April 5, 
2013), 78 FR 35340 (June 12, 2013) (SR-NYSEARCA-2013-34).
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    The Exchange also believes that extending the pilot program for an 
additional 3 months will allow the Program to continue to enhance 
competition among market participants by creating incentives for market 
makers to compete to make better quality markets. By continuing to 
require that market makers both meet the quoting requirements and also 
compete for the daily financial incentives, the quality of quotes on 
the Exchange will continue to improve. This, in turn, will attract more 
liquidity to the Exchange and further improve the quality of trading in 
exchange-listed securities participating in the Program, which will 
also act to bolster the Exchange's listing business.

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

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

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative before 30 days from the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \19\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest. 
Waiver of the operative delay will allow the Exchange to extend the 
Program prior to its expiration on July 28, 2015, which will ensure 
that the Program continues to operate uninterrupted while the Exchange 
and the Commission continue to analyze data regarding the Program. 
Therefore, the Commission hereby waives the 30-day operative delay and 
designates the proposed rule change to be operative upon filing with 
the Commission.\20\
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    \20\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BATS-2015-55 on the subject line.

[[Page 45568]]

Paper Comments

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

All submissions should refer to File No. SR-BATS-2015-55. 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BATS-2015-55 and should be 
submitted on or before August 20, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18636 Filed 7-29-15; 8:45 am]
 BILLING CODE 8011-01-P