81 FR 36632 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 14.13, Company Listing Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 109 (June 7, 2016)

[Federal Register Volume 81, Number 109 (Tuesday, June 7, 2016)]
[Notices]
[Pages 36632-36634]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13314]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77960; File No. SR-BatsBZX-2016-20]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 14.13, Company Listing Fees

June 1, 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 May 20, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend the fees applicable to 
securities listed on the Exchange, which are set forth in BZX Rule 
14.13.
    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
    On August 30, 2011, the Exchange received approval of rules 
applicable to the qualification, listing, and delisting of companies on 
the Exchange,\5\ which it modified on February 8, 2012 in order to 
adopt pricing for the listing of exchange traded products (``ETPs'') 
\6\ on the Exchange,\7\ which it subsequently modified again on June 4, 
2014.\8\ On October 16, 2014, the Exchange modified Rule 14.13, 
entitled ``Company Listing Fees'' to eliminate the annual fees for ETPs 
not participating in the Exchange's Competitive Liquidity Provider 
Program pursuant to Rule 11.8, Interpretation and Policy .02 (the ``CLP

[[Page 36633]]

Program'').\9\ On May 22, 2015, the Exchange further modified Rule 
14.13 to eliminate the $5,000 application fee for ETPs, effectively 
eliminating any compulsory fees for both new ETP issues and transfer 
listings in ETPs on the Exchange \10\ and on September 30, 2015, the 
Exchange began offering an incentive payment to ETPs that are listed on 
the Exchange based on the consolidated average daily volume (the 
``CADV'') of the ETP (the ``Issuer Incentive Program'').\11\
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    \5\ See Securities Exchange Act Release No. 65225 (August 30, 
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
    \6\ As defined in Rule 11.8(e)(1)(A), the term ``ETP'' means any 
security listed pursuant to Exchange Rule 14.11.
    \7\ See Securities Exchange Act Release No. 66422 (February 17, 
2012), 77 FR 11179 (February 24, 2012) (SR-BATS-2012-010).
    \8\ See Securities Exchange Act Release No. 72377 (June 12, 
2014), 79 FR 34822 (June 18, 2014) (SR-BATS-2014-024).
    \9\ See Securities Exchange Act Release No. 73414 (October 23, 
2014), 79 FR 64434 (October 29, 2014) (SR-BATS-2014-050).
    \10\ See Securities Exchange Act Release No. 75085 (June 1, 
2015), 80 FR 32190 (June 5, 2015) (SR-BATS-2015-39).
    \11\ See Securities Exchange Act Release No. 76113 (October 8, 
2015), 80 FR 62142 (October 15, 2015) (SR-BATS-2015-80).
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    The Exchange is now proposing to make an administrative change to 
the Issuer Incentive Program such that an ETP must be enrolled by 
completing the Issuer Incentive Program Enrollment Form with the 
Exchange in order to receive payment under the Issuer Incentive 
Program. Practically, the Exchange cannot provide payment to an ETP 
that is eligible to receive payment under the Issuer Incentive Program 
without certain bank information from the issuer and the ETP cannot 
accept payments from the Exchange without confirming that there are no 
issuer- and fund-specific issues that are created through receipt of 
the payment. All ETPs will be eligible for enrollment in the Issuer 
Incentive Program and, as noted above, this proposed change is only an 
administrative change. As part of this proposal, the Exchange also 
notes that where an ETP is not enrolled with the Exchange on the last 
day of a quarter for which the ETP is eligible to receive payments 
under the Issuer Incentive Program, any such payment is forfeited by 
the ETP.
    The Exchange proposes to implement the amendments to Rule 
14.13(b)(2)(C) effective immediately.
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.\12\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with section 6(b)(4) and 6(b)(5) of the Act,\13\ in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among issuers and it does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that requiring enrollment with the Exchange 
in order to receive payment under the Issuer Incentive Program is a 
reasonable, fair and equitable, and not unfairly discriminatory 
allocation of fees and other charges because, as noted above, the 
Exchange cannot provide payment to an ETP that is eligible to receive 
payment under the Issuer Incentive Program without bank information 
from the issuer and the ETP cannot receive payments from the Exchange 
without confirming that there are no issuer- and fund-specific issues 
that are created through receipt of the payment. Thus, the proposal 
will provide a mechanism to ensure that both the Exchange and the ETP 
are prepared to provide and receive the payment, respectively. 
Additionally, such requirement will apply equally to all ETPs eligible 
for payment under the Issuer Incentive Program.
    Similarly, the Exchange believes that requiring an ETP to be 
enrolled with the Exchange on at least the last day of the quarter for 
which the ETP is eligible to receive payments under the Issuer 
Incentive Program in order to receive the payment is a reasonable, fair 
and equitable, and not unfairly discriminatory allocation of fees and 
other charges because an ETP can be enrolled as part of the application 
process prior to the ETP even listing on the Exchange and even where 
the ETP is enrolled after listing on the Exchange, the process is very 
simple and involves only standard bank account information. Further, to 
the extent that an ETP is not enrolled on the last day of the quarter 
but would otherwise be eligible to receive payment, the Exchange 
believes that it is reasonable, fair and equitable, and not unfairly 
discriminatory for the ETP to forfeit such payment because, as noted 
above, the ETP can be enrolled as part of the application process prior 
to listing on the Exchange and the forfeiture of such payments (rather 
than allowing the payments to carry over for multiple quarters) 
provides the Exchange with financial certainty about the costs 
associated with the Issuer Incentive Program and will allow the 
Exchange to better approximate its operational costs.
    Based on the foregoing, the Exchange believes that the proposed 
amendment to Rule 14.13(b)(2)(C) to implement the Issuer Incentive 
Program is a reasonable, equitable, and non-discriminatory allocation 
of fees to issuers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
Exchange does not believe that the proposed change burdens competition, 
but instead, enhances competition, as it is intended to increase the 
competitiveness of the Exchange's listings program by making clear the 
requirements for the Exchange to provide ETPs with quarterly payments 
based on the CADV of the ETP. As such, the proposal is a competitive 
proposal that is intended to further clarify the Issuer Incentive 
Program and attract additional ETP listings, which will, in turn, 
benefit the Exchange and all other BZX-listed ETPs.

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 \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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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 Number SR-BatsBZX-2016-20 on the subject line.

[[Page 36634]]

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-2016-20. 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 also will be available 
for inspection and copying at the principal offices of the Exchange. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-BatsBZX-2016-
20, and should be submitted on or before June 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-13314 Filed 6-6-16; 8:45 am]
BILLING CODE 8011-01-P