80 FR 80844 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for BZX Options
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 248 (December 28, 2015)
Federal Register Volume 80, Issue 248 (December 28, 2015)
| Page Range | 80844-80847 | |
| FR Document | 2015-32534 |
[Federal Register Volume 80, Number 248 (Monday, December 28, 2015)] [Notices] [Pages 80844-80847] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-32534] [[Page 80844]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76706; File No. SR-BATS-2015-116] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for BZX Options December 21, 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 December 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. 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). --------------------------------------------------------------------------- \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 its fee schedule applicable to the Exchange's options platform to: (i) Bifurcate Market Maker \6\ and Non- BATS Market Maker \7\ pricing; and (ii) to modify the criteria necessary to meet the Customer Penny Pilot Add Volume Tier 6 and the Non-Customer Penny Pilot Take Volume Tier 3. --------------------------------------------------------------------------- \6\ ``Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is registered with the Exchange as a Market Maker as defined in Rule 16.1(a)(37). See the Exchange's fee schedule available at http://www.batsoptions.com/support/fee_schedule/bzx/. \7\ ``Non-BATS Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is not registered with the Exchange as a Market Maker, but is registered as a market maker on another options exchange. Id. --------------------------------------------------------------------------- Market Maker/Non-BATS Market Maker Pricing The Exchange proposes to bifurcate Market Maker and Non-BATS Market Maker pricing within the fee schedule. To do so, the Exchange proposes to amend: (i) The Standard Rates table; (ii) the Fee Codes and Associated Fees table to (A) modify fee codes NM and PM; and (B) add new fee codes NN and PN; (iii) the NBBO Setter tiers under footnote 4 to reference fee codes NN and PN; (iv) footnote 6 to remove references to Non-BATS Market Maker pricing and copy Tier 1 and relocate Tier 3 and the Step-Up Tier to new footnote 10; and (v) footnote 7 to remove references to Non-BATS Market Maker Pricing and copy Tiers 1 and 2 to new footnote 11. The Exchange notes, other than as proposed herein, pricing for Non-BATS Market Maker transactions are the same as Market Maker transactions. The proposed rule change generally bifurcates the existing pricing for Market Makers and Non-BATS Market Makers. Standard Rates and Fee Codes and Associated Fee Tables First, the Exchange proposes to amend the Fee Codes and Associated Fee table to amend fee codes NM and PM to remove references to Non-BATS Market Maker Pricing. Pricing for Non-BATS Market Makers would be set forth under new fee codes NN and PN. Under current fee code NM, Market Makers and Non-BATS Market Makers that add liquidity in non-Penny Pilot Securities \8\ receive a rebate of $0.42 per contract. Under proposed fee code NN, Non-BATS Market Makers that add liquidity in non-Penny Pilot Securities would receive a rebate of $0.36 per contract. Fee code NN would also include references to footnotes 4 and 11, discussed below. --------------------------------------------------------------------------- \8\ ``Penny Pilot Securities'' are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. Id. --------------------------------------------------------------------------- Under current fee code PM, Market Makers and Non-BATS Market Makers that add liquidity in Penny Pilot Securities receive a rebate of $0.35 per contract. Under proposed fee code PN, Non-BATS Market Makers that add liquidity in Penny Pilot Securities would receive a rebate of $0.30 per contract. Fee code PN would also include references to footnotes 4 and 10, discussed below. Second, the Exchange proposes to amend the Standard Rates table to add a row to delineate pricing for Non-BATS Market Makers. Non-BATS Market Maker orders that yield new fee code PN would receive a rebate of $0.30 per contract if they do not qualify for an enhanced rebates under the Exchange's tiered pricing structure. The Exchange does not proposes to amend the enhanced rebates, which are either $0.40, $0.43, or $0.46 per contract depending on the tier that the Non-BATS Market Maker qualifies for. Likewise, Non-BATS Market Maker orders that yield new fee code NN would receive a rebate of $0.36 per contract if they do not qualify for an enhanced rebates under the Exchange's tiered pricing structure. The Exchange does not propose to amend the enhanced rebates, which are either $0.45 or $0.52 per contract depending on the tier that the Non-BATS Market Maker qualifies for. The Exchange believes it is reasonable to provide Market Makers with improved rates than Non-BATS Market Makers as the proposed differentiation recognizes the differing contributions made to the liquidity and trading environment on the Exchange by these market participants. Footnote 4, NBBO Setter Tiers. The Exchange proposes to amend the NBBO Setter tiers under footnote 4 to reference fee codes NN and PN. In addition to fee codes PA, PF, PM, NA, NF, and NM, the Exchange proposes to state that NBBO Setter Tiers 1, 2, and 3 are applicable to fee codes PN and NN. [[Page 80845]] NBBO Setter Tier 4 would be applicable to fee code PN, in addition to PF and PM. All of the fee codes referenced in footnote 4 are applicable to orders that add liquidity. Footnotes 6 and 10, Market Maker and Non-BATS Market Maker Penny Pilot Add Volume Tiers The Exchange proposes to bifurcate the Market Maker and Non-Market Maker pricing in Penny Pilot Securities under footnote 6 by removing references to Non-BATS Market Maker pricing and copy Tier 1 and relocate Tier 3 and the Step-Up Tier to new footnote 10. Footnote 6 would be amended to remove references to Non-BATS Market Makers as the tiers under footnote 6 would only apply to Market Maker activity in Penny Pilot Securities. The criteria for Tier 2 under footnote 6 would continue to reference Non-BATS Market Makers as liquidity a Market Maker adds in a non-market making capacity would continue to be applied towards the tier's requirements. Tiers applicable to Non-BATS Market Maker activity in Penny Pilot Securities would be set forth under new footnote 10. Fee code PN would be applicable to the tiers listed under footnote 10. Under Tier 1, a Non-BATS Market Maker would receive a rebate of $0.40 per contract where they have an ADV \9\ equal to or greater than 0.30% of average TCV.\10\ This is identical to Tier 1 under footnote 6 for Market Makers. Tier 3 and the Step-Up Tier would be deleted from footnote 6 relocated to new footnote 10 without change. Tier 3 from footnote 6 would be listed a Tier 2 under footnote 10. As they do today, a Non- BATS Market Maker would receive a rebate of $0.46 per contract under Tier 2 where they have an ADAV \11\ in Firm/BD/JBO \12\ orders in Penny Pilot Securities (yielding Fee Code PF) equal to or greater than 0.25% of average TCV or an ADV equal to or greater than 1.50% of average TCV. Likewise, under the Step-Up Tier under footnote 10, a Non-BATS Market Maker would receive a rebate of $0.43 per contract where they have an Options Step-Up Add TCV \13\ in Non-Customer orders from March 2015 baseline equal to or greater than 0.15% or an ADAV in Non-BATS Market Maker/Firm/BD/JBO orders equal to or greater than 0.30% of average TCV. --------------------------------------------------------------------------- \9\ As defined in the Exchange's fee schedule. \10\ Id. \11\ Id. \12\ Id. \13\ As defined in the Exchange's fee schedule. --------------------------------------------------------------------------- Footnotes 7 and 11, Market Maker and Non-BATS Market Maker Non-Penny Pilot Add Volume Tiers The Exchange proposes to bifurcate the Market Maker and Non-Market Maker pricing in non-Penny Pilot Securities under footnote 7 by removing references to Non-BATS Market Maker pricing and coping Tiers 1 and 2 to new footnote 11. Footnote 7 would be amended to remove references to Non-BATS Market Makers as the tiers under footnote 7 would only apply to Market Maker activity in non-Penny Pilot Securities. Tiers applicable to Non-BATS Market Maker activity in non-Penny Pilot Securities would be set forth under new footnote 11. Tiers 1 and 2 under footnote 7 would be replicated under new footnote 11 without change. Under Tier 1, a Non-BATS Market Maker would continue to receive a rebate of $0.45 per contract where they have an ADV equal to or greater than 0.30% of average TCV. Under Tier 2, a Non-BATS Market Maker would continue to receive a rebate of $0.52 per contract where they have an ADV equal to or greater than 1.00% of average TCV. Fee code NN would be applicable to the tiers listed under footnote 11. Customer Penny Pilot Add Volume Tier 6 The Exchange currently offers a total of eight Customer \14\ Penny Pilot Add Volume Tiers that provide enhanced rebates for Customer orders in Penny Pilot Securities that add liquidity under fee code PY. Under the Customer Add Volume Tier 6, the Member would receive a rebate of $0.53 per contract where they have an ADAV in Customer orders equal to or greater than 1.80% of average TCV. The Exchange proposes to ease the criteria necessary to qualify for the Customer Penny Pilot Add Volume Tier 6 by requiring an ADAV in Customer orders equal to or greater than 1.60%, rather than 1.80% of average TCV. --------------------------------------------------------------------------- \14\ Id. --------------------------------------------------------------------------- Non-Customer Penny Pilot Take Volume Tier 3 The Exchange currently offers a total of three Non-Customer \15\ Penny Pilot Take Volume Tiers that provide discounted fees for Non- Customer orders in Penny Pilot Securities that remove liquidity under fee code PP. Under the Non-Customer Take Volume Tier 3, the Member would be charged a discounted fee of $0.46 per contract where they have an ADAV in Non-Customer orders equal to or greater than 1.80% of average TCV. The Exchange proposes to ease the criteria necessary to qualify for the Non-Customer Penny Pilot Take Volume Tier 3 by requiring an ADAV in Customer orders equal to or greater than 1.60%, rather than 1.80% of average TCV. --------------------------------------------------------------------------- \15\ Id. --------------------------------------------------------------------------- Implementation Date The Exchange proposes to implement these amendments to its fee schedule immediately.\16\ --------------------------------------------------------------------------- \16\ The Exchange initially filed the proposed fee change on November 30, 2015 (SR-BATS-2015-107). On December 9, 2015, the Exchange withdrew that filing and submitted filing SR-BATS-2015-116. --------------------------------------------------------------------------- 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.\17\ Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,\18\ 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f. \18\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Market Maker/Non-BATS Market Maker Pricing The Exchange also believes it is equitable, reasonable and not unfairly discriminatory to bifurcate Market Maker and Non-BATS Market Maker pricing within the fee schedule. The Exchange notes, other than as proposed herein, pricing for Non-BATS Market Maker transactions are the same as Market Maker transactions. The proposed rule change generally bifurcates the existing pricing for Market Makers and Non- BATS Market Makers. The proposed rule change would serve to clearly delineate within the fee schedule the fees, rebates and tiers available to Market Makers and Non-BATS Market Makers; thereby, avoiding Members confusion regarding the applicable fees and rebates. The Exchange also believes it is equitable, reasonable and not unfairly discriminatory to provide Market Makers with improved rates than Non-BATS Market Makers. The proposed [[Page 80846]] differentiation between Market Makers and Non-BATS Market Makers recognizes the differing contributions made to the liquidity and trading environment on the Exchange by these market participants. Market Makers, unlike Non-BATS Market Makers, have obligations on the Exchange and regulatory requirements,\19\ which do not apply to Non- BATS Market Makers. A Market Maker on the Exchange has the obligation to make continuous markets, engage in course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and not make bids or offers or enter into transactions that are inconsistent with such course of dealings. On the other hand, Non-BATS Market Makers, do not have such obligations on the Exchange. --------------------------------------------------------------------------- \19\ See Exchange Rule 22.5, Obligations of Market Makers. --------------------------------------------------------------------------- Customer Penny Pilot Add and Remove Tier Amendments Volume-based rebates and fees such as the ones currently maintained on the Exchange 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. Easing the criteria for the Customer Penny Pilot Add Volume Tier 6 and Non-Customer Penny Pilot Take Volume Tier 3 are intended to incentivize Members to send additional orders to the Exchange in an effort to qualify for the enhanced rebate or discounted fee available by the respective tier. The Exchange believes that these changes are reasonable, fair and equitable and non-discriminatory, for the reasons set forth with respect to volume-based pricing generally and because such changes will either incentivize participants to further contribute to market quality on the Exchange or will allow the Exchange to earn additional revenue that can be used to offset the addition of new pricing incentives. The Exchange also believes that the proposed fees and rebates remain consistent with pricing previously offered by the Exchange as well as competitors of the Exchange and do not represent a significant departure from the Exchange's general pricing structure. (B) Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the 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. The Exchange does not believes its bifurcation of Market Maker and Non-BATS Market Maker pricing would burden competition as they are intended to simply clearly delineate within the fee schedule the fees, rebates and tiers available to Market Makers and Non-BATS Market Makers; thereby, avoiding Members confusion regarding the applicable fees and rebates. The Exchange also does not believe that providing Market Makers with improved rates than Non-BATS Market Makers would burden competition as the proposed differentiation recognizes the differing contributions made to the liquidity and trading environment on the Exchange by these market participants. The Exchange also does not believe that any of the proposed changes to the Exchange's tiered pricing structure burden competition, but instead, that they enhance competition as they are intended to increase the competitiveness of the Exchange by easing the criteria necessary to qualify for certain tiers. Also, the Exchange believes that the decrease to these thresholds necessary to meet the respective tiers contributes to, rather than burdens competition, as such changes are intended to incentivize participants to increase their participation on the Exchange. (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 \20\ and paragraph (f) of Rule 19b-4 thereunder.\21\ 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. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 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 proposal 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 No. SR-BATS-2015-116 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-2015-116. 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 [[Page 80847]] 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-2015-116 and should be submitted on or before January 19, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-32534 Filed 12-24-15; 8:45 am] BILLING CODE 8011-01-P
![80844 Federal Register / Vol. 80, No. 248 / Monday, December 28, 2015 / Notices
SECURITIES AND EXCHANGE places specified in Item IV below. The under new fee codes NN and PN. Under
COMMISSION Exchange has prepared summaries, set current fee code NM, Market Makers
forth in Sections A, B, and C below, of and Non-BATS Market Makers that add
[Release No. 34–76706; File No. SR–BATS–
2015–116]
the most significant parts of such liquidity in non-Penny Pilot Securities 8
statements. receive a rebate of $0.42 per contract.
Self-Regulatory Organizations; BATS (A) Self-Regulatory Organization’s Under proposed fee code NN, Non-
Exchange, Inc.; Notice of Filing and Statement of the Purpose of, and BATS Market Makers that add liquidity
Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule in non-Penny Pilot Securities would
Rule Change Related to Fees for BZX Change receive a rebate of $0.36 per contract.
Options Fee code NN would also include
1. Purpose references to footnotes 4 and 11,
December 21, 2015. discussed below.
The Exchange proposes to modify its
Pursuant to Section 19(b)(1) of the fee schedule applicable to the Under current fee code PM, Market
Securities Exchange Act of 1934 (the Exchange’s options platform to: (i) Makers and Non-BATS Market Makers
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Bifurcate Market Maker 6 and Non- that add liquidity in Penny Pilot
notice is hereby given that on December BATS Market Maker 7 pricing; and (ii) to Securities receive a rebate of $0.35 per
9, 2015, BATS Exchange, Inc. (the modify the criteria necessary to meet the contract. Under proposed fee code PN,
‘‘Exchange’’ or ‘‘BATS’’) filed with the Customer Penny Pilot Add Volume Tier Non-BATS Market Makers that add
Securities and Exchange Commission 6 and the Non-Customer Penny Pilot liquidity in Penny Pilot Securities
(‘‘Commission’’) the proposed rule Take Volume Tier 3. would receive a rebate of $0.30 per
change as described in Items I, II and III contract. Fee code PN would also
below, which Items have been prepared Market Maker/Non-BATS Market Maker include references to footnotes 4 and 10,
by the Exchange. The Exchange has Pricing discussed below.
designated the proposed rule change as The Exchange proposes to bifurcate Second, the Exchange proposes to
one establishing or changing a member Market Maker and Non-BATS Market amend the Standard Rates table to add
due, fee, or other charge imposed by the Maker pricing within the fee schedule. a row to delineate pricing for Non-BATS
Exchange under Section 19(b)(3)(A)(ii) To do so, the Exchange proposes to Market Makers. Non-BATS Market
of the Act 3 and Rule 19b–4(f)(2) amend: (i) The Standard Rates table; (ii) Maker orders that yield new fee code PN
thereunder,4 which renders the the Fee Codes and Associated Fees table would receive a rebate of $0.30 per
proposed rule change effective upon to (A) modify fee codes NM and PM; contract if they do not qualify for an
filing with the Commission. The and (B) add new fee codes NN and PN; enhanced rebates under the Exchange’s
Commission is publishing this notice to (iii) the NBBO Setter tiers under tiered pricing structure. The Exchange
solicit comments on the proposed rule footnote 4 to reference fee codes NN and does not proposes to amend the
change from interested persons. PN; (iv) footnote 6 to remove references enhanced rebates, which are either
I. Self-Regulatory Organization’s to Non-BATS Market Maker pricing and $0.40, $0.43, or $0.46 per contract
Statement of the Terms of Substance of copy Tier 1 and relocate Tier 3 and the depending on the tier that the Non-
the Proposed Rule Change Step-Up Tier to new footnote 10; and (v) BATS Market Maker qualifies for.
footnote 7 to remove references to Non- Likewise, Non-BATS Market Maker
The Exchange filed a proposal to BATS Market Maker Pricing and copy orders that yield new fee code NN
amend the fee schedule applicable to Tiers 1 and 2 to new footnote 11. The would receive a rebate of $0.36 per
Members 5 and non-members of the Exchange notes, other than as proposed contract if they do not qualify for an
Exchange pursuant to BATS Rules herein, pricing for Non-BATS Market enhanced rebates under the Exchange’s
15.1(a) and (c). Maker transactions are the same as tiered pricing structure. The Exchange
The text of the proposed rule change Market Maker transactions. The does not propose to amend the
is available at the Exchange’s Web site proposed rule change generally enhanced rebates, which are either
at www.batstrading.com, at the bifurcates the existing pricing for $0.45 or $0.52 per contract depending
principal office of the Exchange, and at Market Makers and Non-BATS Market on the tier that the Non-BATS Market
the Commission’s Public Reference Makers. Maker qualifies for.
Room. The Exchange believes it is reasonable
Standard Rates and Fee Codes and
II. Self-Regulatory Organization’s Associated Fee Tables to provide Market Makers with
Statement of the Purpose of, and improved rates than Non-BATS Market
Statutory Basis for, the Proposed Rule First, the Exchange proposes to Makers as the proposed differentiation
Change amend the Fee Codes and Associated recognizes the differing contributions
Fee table to amend fee codes NM and made to the liquidity and trading
In its filing with the Commission, the PM to remove references to Non-BATS
Exchange included statements environment on the Exchange by these
Market Maker Pricing. Pricing for Non- market participants.
concerning the purpose of and basis for BATS Market Makers would be set forth
the proposed rule change and discussed Footnote 4, NBBO Setter Tiers.
any comments it received on the 6 ‘‘Market Maker’’ applies to any transaction The Exchange proposes to amend the
proposed rule change. The text of these identified by a Member for clearing in the Market
NBBO Setter tiers under footnote 4 to
statements may be examined at the Maker range at the OCC, where such Member is
registered with the Exchange as a Market Maker as reference fee codes NN and PN. In
mstockstill on DSK4VPTVN1PROD with NOTICES
1 15
defined in Rule 16.1(a)(37). See the Exchange’s fee addition to fee codes PA, PF, PM, NA,
U.S.C. 78s(b)(1). schedule available at http://www.batsoptions.com/
2 17 CFR 240.19b–4.
NF, and NM, the Exchange proposes to
support/fee_schedule/bzx/.
3 15 U.S.C. 78s(b)(3)(A)(ii). 7 ‘‘Non-BATS Market Maker’’ applies to any
state that NBBO Setter Tiers 1, 2, and 3
4 17 CFR 240.19b–4(f)(2).
transaction identified by a Member for clearing in are applicable to fee codes PN and NN.
5 The term ‘‘Member’’ is defined as ‘‘any the Market Maker range at the OCC, where such
registered broker or dealer that has been admitted Member is not registered with the Exchange as a 8 ‘‘Penny Pilot Securities’’ are those issues quoted
to membership in the Exchange.’’ See Exchange Market Maker, but is registered as a market maker pursuant to Exchange Rule 21.5, Interpretation and
Rule 1.5(n). on another options exchange. Id. Policy .01. Id.
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![Federal Register / Vol. 80, No. 248 / Monday, December 28, 2015 / Notices 80847
inspection and copying at the principal December 30, 2015.6 NASDAQ remove liquidity from the Exchange
office of the Exchange. All comments subsequently submitted a second book after routing to other
received will be posted without change; response letter.7 This order approves the destinations.13 All non-marketable
the Commission does not edit personal proposed rule change. RTFY orders will post on the Exchange
identifying information from book.14
II. Description of the Proposal According to NASDAQ, the
submissions. You should submit only
information that you wish to make NASDAQ is proposing to amend Rule destinations in the System routing table
available publicly. All submissions 4758 to add a new order routing for RTFY will include OTC market
should refer to File No. SR–BATS– option—RTFY—for Designated Retail makers,15 which may also be registered
2015–116 and should be submitted on Orders (‘‘DROs’’).8 NASDAQ states that NASDAQ market makers.16 NASDAQ
or before January 19, 2016. retail order firms 9 often send non- believes these market makers will likely
marketable order flow to post and provide the greatest opportunity for
For the Commission, by the Division of
display on exchanges. However, some price improvement for the DROs, and
Trading and Markets, pursuant to delegated
authority.22 orders that have been deemed to be non- the RTFY routing option will benefit
marketable by the entering firm become DROs by providing additional price
Brent J. Fields,
marketable by the time the exchange improvement opportunities for retail
Secretary. receives them.10 NASDAQ notes that investors.17 NASDAQ anticipates that
[FR Doc. 2015–32534 Filed 12–24–15; 8:45 am] these orders ultimately remove liquidity the RTFY routing option will route to
BILLING CODE 8011–01–P from the NASDAQ order book even trading centers in the System routing
though the firm entering the order did table that have experience executing
not intend them to remove liquidity.11 and providing price improvement to
SECURITIES AND EXCHANGE Under the proposal, a DRO that is DROs.18
COMMISSION marketable upon receipt by NASDAQ As proposed, an order using the RTFY
and that elects to follow the RTFY routing option will be sent to the
[Release No. 34–76718; File No. SR–
NASDAQ–2015–112] routing option will be routed to primary listing exchange for opening,
destinations in the System routing table reopening, and closing auctions.19
Self-Regulatory Organizations; The instead of immediately removing Orders received in non-NASDAQ listed
NASDAQ Stock Market LLC; Order liquidity from the Exchange order securities prior to market open that are
Approving a Proposed Rule Change To book—unless explicitly instructed by not eligible for the pre-market session
Amend Rule 4758 the entering party to check the Exchange will be submitted to the primary listing
order book first.12 RTFY orders may market for inclusion in that market’s
December 21, 2105. opening process.20 Orders received in
I. Introduction
6 See Securities Exchange Act Release No. 76335,
NASDAQ-listed securities prior to
80 FR 69256 (November 9, 2015). market open that are not eligible for the
On September 21, 2015, The 7 See letter from Jonathan F. Cayne, Senior
pre-market session will follow normal
NASDAQ Stock Market LLC Associate General Counsel, NASDAQ to Brent J.
Fields, Secretary, Commission, dated December 11, pre-market processing.21 Orders
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with 2015 (‘‘NASDAQ Supplemental Response’’). received prior to the market open that
the Securities and Exchange 8 A Designated Retail Order is an agency or
are eligible for the pre-market session
Commission (‘‘Commission’’), pursuant riskless principal order that meets the criteria of will be posted—and routed if
to Section 19(b)(1) of the Securities FINRA Rule 5320.03 and that originates from a
natural person and is submitted to NASDAQ by a
Exchange Act of 1934 (‘‘Act’’) 1 and Rule member that designates it pursuant to Rule 7018,
13 See Notice, 80 FR at 59210.
19b–4 thereunder,2 a proposed rule provided that no change is made to the terms of the 14 If a RTFY order is posted on the Exchange,
change to adopt a new routing option, order with respect to price or side of market and either because it was non-marketable when it was
the Retail Order Process (‘‘RTFY’’). The the order does not originate from a trading received or it has exhausted all available liquidity
algorithm or any other computerized methodology. within its limit price—including on the Exchange,
proposed rule change was published for An order from a ‘‘natural person’’ can include Regulation NMS protected quotations and other
comment in the Federal Register on orders on behalf of accounts that are held in a destinations in the System routing table—and the
October 1, 2015.3 The Commission corporate legal form—such as an Individual order is subsequently locked or crossed by another
Retirement Account, Corporation, or a Limited market center, the System will not route to the
received two comment letters on the locking or crossing market center. See id.
Liability Company—that has been established for
proposed rule change 4 and a response the benefit of an individual or group of related 15 An ‘‘OTC market maker’’ in a stock is defined
letter from NASDAQ.5 On November 3, family members, provided that the order is in Rule 600(b)(52) of Regulation NMS as, in general,
2015, the Commission extended the submitted by an individual. Members must submit a dealer that holds itself out as willing to buy and
time period within which to approve a signed written attestation, in a form prescribed by sell the stock, otherwise than on a national
NASDAQ, that they have implemented policies and securities exchange, in amounts of less than block
the proposed rule change, disapprove procedures that are reasonably designed to ensure size (less than 10,000 shares).
the proposed rule change, or institute that substantially all orders designated by the 16 See Notice, 80 FR at 59210.
proceedings to determine whether to member as DROs comply with these requirements. 17 See id. NASDAQ believes that, because retail
disapprove the proposed rule change, to Orders may be designated on an order-by-order orders are generally smaller on average, they are
basis, or by designating all orders on a particular often able to receive better prices than the
order entry port as DROs. See NASDAQ Rule 7018. prevailing national best bid and offer. See id. at
22 17 CFR 200.30–3(a)(12). 9 The term ‘‘retail order firms’’ refers to NASDAQ 59211. NASDAQ believes that this is achieved by
1 15 U.S.C. 78s(b)(1). retail order firms sending their orders to OTC
member firms that provide orders that qualify as
2 17 CFR 240.19b–4. Designated Retail Orders under NASDAQ Rule market makers that provide some level of price
3 See Securities Exchange Act Release No. 75987 7018. improvement. See id.
18 See id. NASDAQ believes that approximately
(September 25, 2015), 80 FR 59210 (‘‘Notice’’). 10 See Notice, 80 FR at 59210.
mstockstill on DSK4VPTVN1PROD with NOTICES
4 See letter from Joseph Saluzzi, Themis Trading 11 See id. 96% of the DROs that will use the RTFY routing
LLC to the Commission, dated September 29, 2015 12 See id. The term ‘‘System routing table’’ refers option will not be marketable and will add liquidity
(‘‘Themis Letter’’); and letter from Suzanne Shatto to the proprietary process for determining the on the Exchange, while the remainder will be
to the Commission, dated October 6, 2015 (‘‘Shatto specific trading venues to which the System routes routed to destinations on the System routing table
Letter’’). orders and the order in which it routes them. for potential price improvement, including to OTC
5 See letter from Jonathan F. Cayne, Senior NASDAQ reserves the right to maintain a different market makers. See id.
19 See id.
Associate General Counsel, NASDAQ to Brent J. System routing table for different routing options
20 See id.
Fields, Secretary, Commission, dated October 22, and to modify the System routing table at any time
2015 (‘‘NASDAQ Response’’). without notice. See NASDAQ Rule 4758(a)(1)(A). 21 See id. and NASDAQ Rule 4752.
VerDate Sep<11>2014 13:31 Dec 24, 2015 Jkt 238001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\28DEN1.SGM 28DEN1](https://thefederalregister.org/doc/80_FR_81092/page/4.svg)
Document Created: 2018-03-02 09:23:39
Document Modified: 2018-03-02 09:23:39
| 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 80844 |
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