81 FR 21417 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Its Equity Options Platform
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 69 (April 11, 2016)
Federal Register Volume 81, Issue 69 (April 11, 2016)
| Page Range | 21417-21420 | |
| FR Document | 2016-08184 |
[Federal Register Volume 81, Number 69 (Monday, April 11, 2016)] [Notices] [Pages 21417-21420] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-08184] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77524; File No. SR-BatsBZX-2016-04] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Its Equity Options Platform April 5, 2016. 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 March 31, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members \5\ and non-members of the Exchange pursuant to BZX Rules 15.1(a) and (c). --------------------------------------------------------------------------- \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 [[Page 21418]] 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 amend its fee schedule (``Fee Schedule'') for its equity options platform (``BZX Options'') to add the definitions of ``Appointed MM'' and ``Appointed OEF'', effective April 1, 2016, which would increase opportunities for firms to qualify for tiered pricing on BZX Options. Specifically, the Exchange proposes to allow a Market Maker to designate an Order Entry Firm (``OEF'') as its ``Appointed OEF'' and for an OEF to designate a Market Maker as its ``Appointed MM,'' for purposes of the Fee Schedule. Members of BZX Options would effectuate such designation by completing and sending an executed Volume Aggregation and Execution Detail Request form by email to the Exchange.\6\ As specified in the proposed Fee Schedule, the Exchange would view the transmittal of the completed form as acceptance of such an appointment.\7\ The proposed new concepts would be applicable to all tiered pricing offered by the Exchange, and are designed to increase opportunities for firms to qualify for such tiers. --------------------------------------------------------------------------- \6\ See proposed language for ``Designating an Appointed OEF/ Appointed MM'' under ``Definitions'' section of the Fee Schedule. Members should direct their executed forms to [email protected]. \7\ The Exchange further notes that, as proposed, the Exchange would only recognize one such designation for each party once every 12 months, which designation would remain in effect unless or until the Exchange receives written notice from either party indicating that the appointment has been terminated. Id. --------------------------------------------------------------------------- The Exchange currently offers tiers as described in the footnotes section of the Fee Schedule. Under the current tiers, Members that achieve certain volume criteria may qualify for reduced fees or enhanced rebates for various executions, including executions of Customer \8\ and Market Maker \9\ orders. In connection with such tiers, the Exchange calculates on a monthly basis a Member's ADV \10\ and/or ADAV \11\ in the applicable category (e.g., Customer orders or Market Maker orders), as a percentage of average TCV.\12\ The Exchange also offers various incentives focused on growth that compare a Member's ADAV as compared to a baseline ADAV established in a prior period (i.e., the Exchange's ``step-up'' pricing). Upon reaching a volume threshold that qualifies a Member for a specified tier, a Member receives the enhanced rebate or reduced fee associated with the highest tier achieved for each eligible contract executed on the Exchange. Under the Exchange's current Fee Schedule, a Member is permitted to aggregate volume with other Members that control, are controlled by, or are under common control with such Member. Thus, Members that act as OEFs with affiliated broker-dealers that are Market Makers on the Exchange, and vice-versa, may be able to qualify for certain pricing incentives offered by the Exchange based on such affiliation and aggregation. --------------------------------------------------------------------------- \8\ The term ``Customer'' applies to any transaction identified by a Member for clearing in the Customer range at the Options Clearing Corporation (``OCC''), excluding any transaction for a Broker Dealer or a ``Professional'' as defined in Exchange Rule 16.1. \9\ The term ``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). \10\ ``ADV'' means average daily volume calculated as the number of contracts added or removed, combined, per day. \11\ ``ADAV'' means average daily added volume calculated as the number of contracts per day. \12\ ``TCV'' means total consolidated volume calculated as the volume reported by all exchanges to the consolidated transaction reporting plan for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. --------------------------------------------------------------------------- The proposal would be available to all Market Makers and OEFs. Specifically, the proposed changes would enable any Market Maker to qualify an Appointed OEF for purposes of volume-based tiers on the Exchange. In this regard, the proposed change would enable a Market Maker without an affiliated OEF--or with an affiliated OEF that doesn't meet the volume requirements for tiered pricing--to enter into a relationship with an Appointed OEF. Similarly, as proposed, an OEF, by virtue of designating an Appointed MM, would be able to aggregate its own Customer volume with the activity of its Appointed MM, which would enhance the OEF's potential to qualify for tiered pricing.\13\ --------------------------------------------------------------------------- \13\ An OEF that has both an Appointed MM and an affiliated Market Maker may only aggregate volumes with one of these two, not both. Specifically, the Exchange proposes to specify in the definitions section that that ``[w]ith prior notice to the Exchange, a Member may aggregate ADAV or ADV with other Members that control, are controlled by, or are under common control with such Member or who have been appointed as an Appointed OEF or Appointed OEF.'' See proposed Fee Schedule, ``Definitions'', emphasis added. --------------------------------------------------------------------------- Thus, the proposed changes would enable firms that may not currently be eligible for tiered pricing incentives to avail themselves of such incentives as well as to assist firms that are currently eligible for such incentives to potentially achieve a higher tier, thus qualifying for higher rebates or reduced fees. The Exchange believes these proposed changes would incentivize firms to direct their order flow to the Exchange to the benefit of all market participants. Further, the Exchange believes that the proposed changes would encourage Market Maker firms to increase their participation on the Exchange, which would increase capital commitment and liquidity on the Exchange to the benefit of all market participants. As proposed, the Exchange would only process one designation of an Appointed OEF and Appointed MM per year, which designation would remain in effect unless or until the parties informed the Exchange of its termination.\14\ The Exchange believes that this requirement would impose a measure of exclusivity and would enable both parties to rely upon each other's transaction volumes executed on the Exchange, and potentially increase such volumes, which is beneficial to all Exchange participants. --------------------------------------------------------------------------- \14\ See supra, note 7. --------------------------------------------------------------------------- 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.\15\ Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,\16\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f. \16\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes that its proposed fees and rebates are reasonable, fair and equitable, and non-discriminatory for the following reasons. First, the proposal would be available to all Market Makers and OEFs and the decision to be designated as an ``Appointed OEF'' or ``Appointed MM'' is completely voluntary and Members may elect to accept this appointment or not. In addition, the proposed changes would enable firms that are not currently eligible for tiered pricing to avail themselves such pricing as well as to assist firms that are currently eligible [[Page 21419]] for such tiers to potentially achieve a higher tier, thus qualifying for higher rebates or lower fees. The Exchange believes these proposed changes would incentivize firms to direct their order flow to the Exchange. Specifically, the proposed changes would enable any Market Maker to qualify its Appointed OEF for purposes of tiered pricing. Moreover, the proposed change would allow any OEF, by virtue of designating an Appointed MM, to aggregate its own volume, including Customer volume, with the activity of its Appointed MM, which would enhance the OEF's potential to qualify for enhanced rebates or reduced fees. The Exchange believes these proposed changes would incentivize Appointed OEFs with an Appointed MM to direct their order flow to the Exchange, which increase in orders routed to the Exchange would benefit all market participants by expanding liquidity and providing more trading opportunities on the Exchange. Similarly, the Exchange believes these proposed changes would incentivize Appointed MMs with an Appointed OEF to increase their participation on the Exchange, which would increase capital commitment and liquidity and decrease spreads on the Exchange to the benefit of all market participants. The Exchange believes that, similar to volume based tiers offered by the Exchange, the benefits of the proposal extend to all market participants based on the increased quality of liquidity on the Exchange, including those market participants that opt not to become an Appointed OEF or Appointed MM. Further, the Exchange believes that the proposal is reasonable and equitably allocated because it is beneficial to all Exchange participants based on the fact that it enables parties to rely upon each other's transaction volumes executed on the Exchange, and potentially increase such volumes. In turn, as above, the potential increase in order flow, capital commitment and resulting liquidity on the Exchange would benefit all market participants by expanding liquidity, providing more trading opportunities and tighter spreads. The proposal is also reasonable, equitable and not unfairly discriminatory because the Exchange would only process one designation of an Appointed OEF and Appointed MM per year, which requirement would impose a measure of exclusivity while allowing both parties to rely upon each other's transaction volumes executed on the Exchange, and potentially increase such volumes, again, to the benefit of all market participants. Finally, the Exchange believes the proposal is reasonable, equitable and not unfairly discriminatory as it may encourage an increase in orders routed to the Exchange, which would expand liquidity and provide more trading opportunities and tighter spreads to the benefit of all market participants, even to those market participants that are either currently affiliated by virtue of their common ownership or that opt not to become an Appointed OEF or Appointed MM under this proposal. (B) Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed amendments to its fee schedule would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed changes are pro-competitive as they would increase opportunities for firms to qualify for tiered pricing on the Exchange, which may increase intermarket and intramarket competition by incenting participants to direct their orders to the Exchange thereby increasing the volume of contracts traded on the Exchange and enhancing the quality of quoting. Enhanced market quality and increased transaction volume that results from the anticipated increase in order flow directed to the Exchange would benefit all market participants and improve competition on the Exchange. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. (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 \17\ and paragraph (f) of Rule 19b-4 thereunder.\18\ 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 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 [email protected]. Please include File Number SR-BatsBZX-2016-04 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-BatsBZX-2016-04. 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 [[Page 21420]] available publicly. All submissions should refer to File Number SR- BatsBZX-2016-04 and should be submitted on or before May 2, 2016. --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-08184 Filed 4-8-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices 21417
B. Self-Regulatory Organization’s Paper Comments SECURITIES AND EXCHANGE
Statement on Burden on Competition COMMISSION
• Send paper comments in triplicate
The Exchange does not believe that to Secretary, Securities and Exchange [Release No. 34–77524; File No. SR-
this proposed rule change would Commission, 100 F Street NE., BatsBZX–2016–04]
impose any burden on competition not Washington, DC 20549–1090.
necessary or appropriate in furtherance Self-Regulatory Organizations; Bats
of the purposes of the Act. The All submissions should refer to File No. BZX Exchange, Inc.; Notice of Filing
proposed rule change would reduce the SR–NYSEMKT–2016–13. This file and Immediate Effectiveness of a
burden on Floor Brokers that have number should be included on the Proposed Rule Change Related to Fees
reported that the identity of the firm subject line if email is used. To help the for Its Equity Options Platform
through which each trade will clear is Commission process and review your April 5, 2016.
not always initially provided when an comments more efficiently, please use Pursuant to Section 19(b)(1) of the
order is presented and that waiting to only one method. The Commission will Securities Exchange Act of 1934 (the
receive this information and enter it into post all comments on the Commission’s ‘‘Act’’),1 and Rule 19b-4 thereunder,2
EOC can delay the representation and Internet Web site (http://www.sec.gov/ notice is hereby given that on March 31,
execution of an order. By reducing Floor rules/sro.shtml). Copies of the 2016, Bats BZX Exchange, Inc. (the
Brokers’ burden on order entry submission, all subsequent ‘‘Exchange’’ or ‘‘BZX’’) filed with the
compliance, the Exchange believes the amendments, all written statements Securities and Exchange Commission
proposal will improve the with respect to the proposed rule (‘‘Commission’’) the proposed rule
competitiveness of Exchange Floor change that are filed with the change as described in Items I, II and III
Brokers, by enabling more timely Commission, and all written below, which Items have been prepared
executions of open outcry trades and communications relating to the by the Exchange. The Exchange has
promoting competition for order flow proposed rule change between the designated the proposed rule change as
among market participants and the Commission and any person, other than one establishing or changing a member
options exchanges. due, fee, or other charge imposed by the
those that may be withheld from the
C. Self-Regulatory Organization’s public in accordance with the Exchange under Section 19(b)(3)(A)(ii)
Statement on Comments on the provisions of 5 U.S.C. 552, will be of the Act 3 and Rule 19b-4(f)(2)
Proposed Rule Change Received From thereunder,4 which renders the
available for Web site viewing and
Members, Participants, or Others proposed rule change effective upon
printing in the Commission’s Public
filing with the Commission. The
No written comments were solicited Reference Room, 100 F Street NE., Commission is publishing this notice to
or received with respect to the proposed Washington, DC 20549 on official solicit comments on the proposed rule
rule change. business days between the hours of change from interested persons.
10:00 a.m. and 3:00 p.m. Copies of such
III. Date of Effectiveness of the filing also will be available for I. Self-Regulatory Organization’s
Proposed Rule Change and Timing for inspection and copying at the principal Statement of the Terms of Substance of
Commission Action office of the Exchange. All comments the Proposed Rule Change
Within 45 days of the date of received will be posted without change; The Exchange filed a proposal to
publication of this notice in the Federal the Commission does not edit personal amend the fee schedule applicable to
Register or within such longer period (i) identifying information from Members 5 and non-members of the
as the Commission may designate up to submissions. You should submit only Exchange pursuant to BZX Rules 15.1(a)
90 days of such date if it finds such information that you wish to make and (c).
longer period to be appropriate and available publicly. All submissions The text of the proposed rule change
publishes its reasons for so finding or should refer to File No. SR–NYSEMKT– is available at the Exchange’s Web site
(ii) as to which the Exchange consents, 2016–13, and should be submitted on or at www.batstrading.com, at the
the Commission shall: (a) By order before May 2, 2016. principal office of the Exchange, and at
approve or disapprove such proposed the Commission’s Public Reference
For the Commission, by the Division of Room.
rule change, or (b) institute proceedings Trading and Markets, pursuant to delegated
to determine whether the proposed rule authority.23 II. Self-Regulatory Organization’s
change should be disapproved. Statement of the Purpose of, and
Robert W. Errett,
IV. Solicitation of Comments Statutory Basis for, the Proposed Rule
Deputy Secretary. Change
Interested persons are invited to [FR Doc. 2016–08179 Filed 4–8–16; 8:45 am]
In its filing with the Commission, the
submit written data, views, and BILLING CODE 8011–01–P
Exchange included statements
arguments concerning the foregoing, concerning the purpose of and basis for
including whether the proposed rule the proposed rule change and discussed
change is consistent with the Act. any comments it received on the
Comments may be submitted by any of proposed rule change. The text of these
the following methods: statements may be examined at the
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
1 15 U.S.C. 78s(b)(1).
• Use the Commission’s Internet 2 17 CFR 240.19b–4.
comment form (http://www.sec.gov/ 3 15 U.S.C. 78s(b)(3)(A)(ii).
rules/sro.shtml); or 4 17 CFR 240.19b–4(f)(2).
5 The term ‘‘Member’’ is defined as ‘‘any
• Send an email to rule-comments@ registered broker or dealer that has been admitted
sec.gov. Please include File No. SR– to membership in the Exchange.’’ See Exchange
NYSEMKT–2016–13 on the subject line. 23 17 CFR 200.30–3(a)(12). Rule 1.5(n).
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places specified in Item IV below. The on a monthly basis a Member’s ADV 10 eligible for tiered pricing incentives to
Exchange has prepared summaries, set and/or ADAV 11 in the applicable avail themselves of such incentives as
forth in Sections A, B, and C below, of category (e.g., Customer orders or well as to assist firms that are currently
the most significant parts of such Market Maker orders), as a percentage of eligible for such incentives to
statements. average TCV.12 The Exchange also offers potentially achieve a higher tier, thus
various incentives focused on growth qualifying for higher rebates or reduced
(A) Self-Regulatory Organization’s that compare a Member’s ADAV as fees. The Exchange believes these
Statement of the Purpose of, and compared to a baseline ADAV proposed changes would incentivize
Statutory Basis for, the Proposed Rule established in a prior period (i.e., the firms to direct their order flow to the
Change Exchange’s ‘‘step-up’’ pricing). Upon Exchange to the benefit of all market
1. Purpose reaching a volume threshold that participants. Further, the Exchange
qualifies a Member for a specified tier, believes that the proposed changes
The Exchange proposes to amend its a Member receives the enhanced rebate would encourage Market Maker firms to
fee schedule (‘‘Fee Schedule’’) for its or reduced fee associated with the increase their participation on the
equity options platform (‘‘BZX highest tier achieved for each eligible Exchange, which would increase capital
Options’’) to add the definitions of contract executed on the Exchange. commitment and liquidity on the
‘‘Appointed MM’’ and ‘‘Appointed Under the Exchange’s current Fee Exchange to the benefit of all market
OEF’’, effective April 1, 2016, which Schedule, a Member is permitted to participants.
would increase opportunities for firms aggregate volume with other Members As proposed, the Exchange would
to qualify for tiered pricing on BZX that control, are controlled by, or are only process one designation of an
Options. Specifically, the Exchange under common control with such Appointed OEF and Appointed MM per
proposes to allow a Market Maker to Member. Thus, Members that act as year, which designation would remain
designate an Order Entry Firm (‘‘OEF’’) OEFs with affiliated broker-dealers that in effect unless or until the parties
as its ‘‘Appointed OEF’’ and for an OEF are Market Makers on the Exchange, and informed the Exchange of its
to designate a Market Maker as its vice-versa, may be able to qualify for termination.14 The Exchange believes
‘‘Appointed MM,’’ for purposes of the certain pricing incentives offered by the that this requirement would impose a
Fee Schedule. Members of BZX Options Exchange based on such affiliation and measure of exclusivity and would
would effectuate such designation by aggregation. enable both parties to rely upon each
completing and sending an executed The proposal would be available to all other’s transaction volumes executed on
Volume Aggregation and Execution Market Makers and OEFs. Specifically, the Exchange, and potentially increase
Detail Request form by email to the the proposed changes would enable any such volumes, which is beneficial to all
Exchange.6 As specified in the proposed Market Maker to qualify an Appointed Exchange participants.
Fee Schedule, the Exchange would view OEF for purposes of volume-based tiers
on the Exchange. In this regard, the 2. Statutory Basis
the transmittal of the completed form as
acceptance of such an appointment.7 proposed change would enable a Market The Exchange believes that the
The proposed new concepts would be Maker without an affiliated OEF—or proposed rule change is consistent with
applicable to all tiered pricing offered with an affiliated OEF that doesn’t meet the requirements of the Act and the
by the Exchange, and are designed to the volume requirements for tiered rules and regulations thereunder that
increase opportunities for firms to pricing—to enter into a relationship are applicable to a national securities
qualify for such tiers. with an Appointed OEF. Similarly, as exchange, and, in particular, with the
proposed, an OEF, by virtue of requirements of Section 6 of the Act.15
The Exchange currently offers tiers as
designating an Appointed MM, would Specifically, the Exchange believes that
described in the footnotes section of the
be able to aggregate its own Customer the proposed rule change is consistent
Fee Schedule. Under the current tiers,
volume with the activity of its with Section 6(b)(4) of the Act,16 in that
Members that achieve certain volume
Appointed MM, which would enhance it provides for the equitable allocation
criteria may qualify for reduced fees or
the OEF’s potential to qualify for tiered of reasonable dues, fees and other
enhanced rebates for various executions,
pricing.13 charges among members and other
including executions of Customer 8 and Thus, the proposed changes would persons using any facility or system
Market Maker 9 orders. In connection enable firms that may not currently be which the Exchange operates or
with such tiers, the Exchange calculates
controls.
10 ‘‘ADV’’ means average daily volume calculated
The Exchange believes that its
6 See proposed language for ‘‘Designating an as the number of contracts added or removed,
Appointed OEF/Appointed MM’’ under
proposed fees and rebates are
combined, per day.
‘‘Definitions’’ section of the Fee Schedule. Members 11 ‘‘ADAV’’ means average daily added volume reasonable, fair and equitable, and non-
should direct their executed forms to calculated as the number of contracts per day. discriminatory for the following
membershipservices@bats.com. 12 ‘‘TCV’’ means total consolidated volume reasons. First, the proposal would be
7 The Exchange further notes that, as proposed,
calculated as the volume reported by all exchanges available to all Market Makers and OEFs
the Exchange would only recognize one such to the consolidated transaction reporting plan for
designation for each party once every 12 months, the month for which the fees apply, excluding
and the decision to be designated as an
which designation would remain in effect unless or volume on any day that the Exchange experiences ‘‘Appointed OEF’’ or ‘‘Appointed MM’’
until the Exchange receives written notice from an Exchange System Disruption and on any day is completely voluntary and Members
either party indicating that the appointment has with a scheduled early market close. may elect to accept this appointment or
been terminated. Id. 13 An OEF that has both an Appointed MM and
8 The term ‘‘Customer’’ applies to any transaction
not. In addition, the proposed changes
an affiliated Market Maker may only aggregate
mstockstill on DSK4VPTVN1PROD with NOTICES
identified by a Member for clearing in the Customer volumes with one of these two, not both. would enable firms that are not
range at the Options Clearing Corporation (‘‘OCC’’), Specifically, the Exchange proposes to specify in currently eligible for tiered pricing to
excluding any transaction for a Broker Dealer or a the definitions section that that ‘‘[w]ith prior notice avail themselves such pricing as well as
‘‘Professional’’ as defined in Exchange Rule 16.1. to the Exchange, a Member may aggregate ADAV or
9 The term ‘‘Market Maker’’ applies to any
to assist firms that are currently eligible
ADV with other Members that control, are
transaction identified by a Member for clearing in controlled by, or are under common control with
14 See supra, note 7.
the Market Maker range at the OCC, where such such Member or who have been appointed as an
15 15 U.S.C. 78f.
Member is registered with the Exchange as a Market Appointed OEF or Appointed OEF.’’ See proposed
Maker as defined in Rule 16.1(a)(37). Fee Schedule, ‘‘Definitions’’, emphasis added. 16 15 U.S.C. 78f(b)(4).
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![21420 Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices
available publicly. All submissions 19(b)(2) of the Act,5 the Commission Funds will be managed by ALPS
should refer to File Number SR– designated a longer period within which Advisors, Inc. (‘‘Adviser’’), and
BatsBZX–2016–04 and should be to either approve the proposed rule RiverFront Investment Group, LLC
submitted on or before May 2, 2016. change, disapprove the proposed rule (‘‘Sub-Adviser’’) will be the investment
For the Commission, by the Division of change, or institute proceedings to sub-adviser for the Funds.10
Trading and Markets, pursuant to delegated determine whether to disapprove the
A. RiverFront Dynamic Unconstrained
authority.19 proposed rule change.6 On April 1,
Income ETF
Robert W. Errett, 2016, the Exchange submitted
Deputy Secretary. Amendment No. 3 to the proposed rule 1. Principal Investment Strategies
change.7 The Commission is publishing The Exchange states that the
[FR Doc. 2016–08184 Filed 4–8–16; 8:45 am]
this notice to solicit comment on investment objective of the Fund will be
BILLING CODE 8011–01–P
Amendment Nos. 1, 2, and 3 to the to seek total return with an emphasis on
proposed rule change from interested income as the source of that total return.
persons and is approving the proposed Under normal circumstances, the Fund
SECURITIES AND EXCHANGE
rule change, as modified by Amendment will invest at least 65% of its assets in
COMMISSION
Nos. 1, 2, and 3, on an accelerated basis. the securities and financial instruments
[Release No. 34–77522; File No. SR– II. The Exchange’s Description of the described below.11 The average maturity
NYSEArca–2015–125] Proposal 8 or duration of the Fund’s portfolio of
Fixed Income Securities (as described
Self-Regulatory Organizations; NYSE The Exchange proposes to list and
below) will vary based on the Sub-
Arca, Inc.; Notice of Filing of trade the Shares under NYSE Arca
Adviser’s assessment of economic and
Amendment Nos. 1, 2, and 3 and Order Equities Rule 8.600, which governs the
market conditions; however, the Sub-
Granting Accelerated Approval of a listing and trading of Managed Fund
Adviser intends to manage the Fund’s
Proposed Rule Change, as Modified by Shares. The Funds are each a series of
portfolio so that it has an average
Amendment Nos. 1, 2, and 3, To List ALPS ETF Trust (‘‘Trust’’), a statutory
duration of between two and ten years,
and Trade Shares of RiverFront trust organized under the laws of the
State of Delaware and registered with under normal circumstances.
Dynamic Unconstrained Income ETF According to the Exchange, the
and RiverFront Dynamic Core Income the Commission as an open-end
Fund’s portfolio is constructed through
ETF Under NYSE Arca Equities Rule management investment company.9 The
a two-step process. The first step is
8.600 5 15
setting the strategic allocation among
U.S.C. 78s(b)(2).
6 See Securities Exchange Act Release No. 77184, different fixed income asset classes,
April 5, 2016.
81 FR 9532 (February 25, 2016). The Commission with the objective being to construct an
I. Introduction designated April 5, 2016, as the date by which it allocation that is designed to balance
should approve, disapprove, or institute the probability of upside returns with
On December 15, 2015, NYSE Arca, proceedings to determine whether to disapprove the
Inc. (‘‘Exchange’’) filed with the proposed rule change.
7 In Amendment No. 3, the Exchange: (i) Revised 1940 Act relating to the Funds (File Nos. 333–
Securities and Exchange Commission 148826 and 811–22175) (‘‘Registration Statement’’).
the description of the Funds’ portfolio construction
(‘‘Commission’’), pursuant to Section and asset allocation methodology; (ii) clarified the The Exchange states that the Commission has
19(b)(1) of the Securities Exchange Act percentage limitations on investments in the issued an order granting certain exemptive relief to
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’)1 and securities of issuers located in emerging markets for the Trust and the Adviser (as defined herein) under
each Fund, and (iii) added representations that (a) the 1940 Act. See Investment Company Act Release
Rule 19b–4 thereunder,2 a proposed rule No. 30553 (June 11, 2013) (File No. 812–13884)
all statements and representations made in the
change to list and trade shares filing regarding the description of the portfolio, (‘‘Exemptive Order’’). The Exchange states that the
(‘‘Shares’’) of the following under NYSE limitations on portfolio holdings or reference assets, Funds will be offered in reliance upon the
Arca Equities Rule 8.600: RiverFront or the applicability of Exchange rules and Exemptive Order issued to the Trust and the
surveillance procedures shall constitute continued Adviser.
Dynamic Unconstrained Income ETF listing requirements for listing the Shares on the 10 The Exchange states that neither the Adviser
and RiverFront Dynamic Core Income Exchange; and (b) the issuer has represented to the nor the Sub-Adviser is registered as a broker-dealer.
ETF (each a ‘‘Fund,’’ and collectively, Exchange that it will advise the Exchange of any The Exchange states that each of the Adviser and
‘‘Funds’’). The Commission published failure by the Funds to comply with the continued Sub-Adviser is affiliated with a broker-dealer and
listing requirements, and, pursuant to its obligation has implemented and will maintain a fire wall with
notice of the proposed rule change in under section 19(g)(1) of the Exchange Act, the respect to its broker-dealer affiliate regarding access
the Federal Register on January 6, Exchange will, monitor for compliance with its to information concerning the composition of
2016.3 On January 19, 2016, and January continued listing requirements, and if the Funds are and/or changes to a Fund portfolio. In the event (a)
29, 2016, the Exchange submitted not in compliance with the applicable listing the Adviser or Sub-Adviser becomes newly
requirements, the Exchange will commence affiliated with a broker-dealer, or (b) any new
Amendment Nos. 1 and 2, respectively, delisting procedures under the Exchange’s rules. adviser or sub-adviser becomes affiliated with a
to the proposed rule change.4 On Amendment No. 3 is available at https:// broker-dealer, such adviser or sub-adviser will
February 19, 2016, pursuant to Section www.sec.gov/comments/sr-nysearca-2015-125/ implement a fire wall with respect to such broker-
nysearca2015125-3.pdf. dealer regarding access to information concerning
8 Additional information regarding the Trust (as the composition of and/or changes to the portfolio,
19 17 CFR 200.30–3(a)(12). defined herein), the Funds, and the Shares, and will be subject to procedures designed to
1 15 U.S.C. 78s(b)(1). including investment strategies, risks, creation and prevent the use and dissemination of material non-
2 17 CFR 240.19b–4.
redemption procedures, fees, portfolio holdings, public information regarding such portfolio.
3 See Securities Exchange Act Release No. 34– disclosure policies, calculation of net asset value 11 The term ‘‘under normal circumstances’’
76798 (December 30, 2015), 81 FR 526 (January 6, (‘‘NAV’’), distributions, and taxes, among other includes, but is not limited to, the absence of
2016) (NYSEArca–2015–125) (‘‘Notice’’). things, can be found in the Notice and the extreme volatility or trading halts in the securities
mstockstill on DSK4VPTVN1PROD with NOTICES
4 Amendment No. 1 replaced and superseded the Registration Statement, as applicable. See Notice, markets or the financial markets generally;
original filing in its entirety. Amendment No. 1 is supra note 3, and Registration Statement, infra note circumstances under which a Fund’s investments
available at https://www.sec.gov/comments/sr- 9. are made for temporary defensive purposes;
nysearca-2015-125/nysearca2015125.shtml. 9 The Exchange states that the Trust is registered operational issues causing dissemination of
Amendment No. 2 replaced and superseded the under the 1940 Act. According to the Exchange, on inaccurate market information; or force majeure
original filing, as modified by Amendment No. 1, September 1, 2015, the Trust filed with the type events such as systems failure, natural or man-
in its entirety. Amendment No. 2 is available at Commission an amendment to its registration made disaster, act of God, armed conflict, act of
https://www.sec.gov/comments/sr-nysearca-2015- statement on Form N–1A under the Securities Act terrorism, riot or labor disruption or any similar
125/nysearca2015125.shtml. of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’) and the intervening circumstance.
VerDate Sep<11>2014 18:37 Apr 08, 2016 Jkt 238001 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1](https://thefederalregister.org/doc/81_FR_21486/page/4.svg)
Document Created: 2016-04-09 00:11:33
Document Modified: 2016-04-09 00:11:33
| 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 | 81 FR 21417 |
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