81 FR 2275 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of BATS Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 10 (January 15, 2016)

[Federal Register Volume 81, Number 10 (Friday, January 15, 2016)]
[Notices]
[Pages 2275-2276]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00640]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76863; File No. SR-BATS-2015-120]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use of BATS Exchange, Inc.

January 11, 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 December 29, 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). The change to the fee schedule pursuant to this 
proposal is effective upon filing.
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify its fee schedule applicable to the 
Exchange's options platform to modify the criteria necessary to meet 
the Customer \6\ Step-Up Volume Tier under footnote 1. The Exchange 
currently offers a total of eight Customer Penny Pilot Add Volume Tiers 
under footnote 1 that provide enhanced rebates for Customer orders in 
Penny Pilot Securities that add liquidity under fee code PY.\7\ Under 
the Customer Step-Up Volume Tier, the Member would receive a rebate of 
$0.53 per contract where they have an Options Step-Up Add TCV \8\ in 
Customer orders from September 2015 baseline equal to or greater than 
0.40%. The Exchange proposes to ease the criteria necessary to qualify 
for the Customer Step-Up Volume Tier by requiring an Options Step-Up 
Add TCV in Customer orders from September 2015 baseline equal to or 
greater than 0.35%. The Exchange proposes to implement this amendment 
to its fee schedule on January 4, 2016.
---------------------------------------------------------------------------

    \6\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/bzx/.
    \7\ Fee code PY is appended to Customer orders that add 
liquidity in Penny Pilot Securities. Id. Penny Pilot Securities is 
defined in the Exchange's fee schedule. Id. Orders yielding fee code 
PY receive a rebate of $0.25 per share, absent achieving a tier and 
receiving an increased rebate under footnote 1.
    \8\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/bzx/.
---------------------------------------------------------------------------

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. 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act, 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.
    Volume-based rebates such as those currently maintained on the 
Exchange

[[Page 2276]]

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 Step-Up Volume Tier is intended to incentivize Members to send 
additional orders to the Exchange in an effort to qualify for the 
enhanced rebate available by the respective tier.
    The Exchange believes that this change is reasonable, fair and 
equitable and non-discriminatory, for the reasons set forth with 
respect to volume-based pricing generally and because such change 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 rebate remains consistent with 
pricing previously offered by the Exchange as well as competitors of 
the Exchange and does 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 amendment 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 believe that the proposed change to the Exchange's 
tiered pricing structure burdens competition, but instead, enhances 
competition as it is intended to increase the competitiveness of the 
Exchange by easing the criteria necessary to qualify for the Customer 
Step-Up Volume tier. Also, the Exchange believes that the decrease to 
the tier's threshold contributes to, rather than burdens competition, 
as such change is 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 \9\ and paragraph (f) of Rule 19b-4 
thereunder.\10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 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-2015-120 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 No. SR-BATS-2015-120. 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-2015-120 and should be 
submitted on or before February 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2016-00640 Filed 1-14-16; 8:45 am]
 BILLING CODE 8011-01-P