81 FR 46725 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of Bats BZX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 137 (July 18, 2016)

Page Range		46725-46728
FR Document		2016-16849
Federal Register, Volume 81 Issue 137 (Monday, July 18, 2016)
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46725-46728]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16849]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78305; File No. SR-BatsBZX-2016-36]


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

July 12, 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 July 1, 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 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).
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    \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).
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    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 amend its fee schedule for its equity 
options platform (``BZX Options'') to: (i) Reduce the rate for fee code 
PA, which is appended to Professional \6\ orders in Penny Pilot 
Securities; \7\ (ii) add a new tier under footnote 9, Professional 
Penny Pilot Add Volume Tiers; (iii) to modify the criteria for the 
Customer Penny Pilot Add Tier 5 under footnote 1; and (iv) to modify 
the criteria for the Non-Customer Penny Pilot Take Volume Tier 1 under 
footnote 3. Additionally, the Exchange proposes to rename and ease the 
qualifications for the: (i) Firm, Broker Dealer, and Joint Back Office 
Penny Pilot Add Volume Step-Up Tier under footnote 2; (ii) Firm, Broker 
Dealer, and Joint Back Office Non-Penny Pilot Add Volume Step-Up Tier 
under footnote 8; and (iii) the Away Market Penny Pilot Add Volume 
Step-Up Tier under footnote 10. The Exchange also proposes to ease the 
criteria for the NBBO Setter Tier 3 under footnote 4.
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    \6\ The term ``Professional'' applies to any transaction 
identified by a Member as such pursuant to Exchange Rule 16.1.
    \7\ The term ``Penny Pilot Security'' applies to those issues 
that are quoted pursuant to Exchange Rule 21.5, Interpretation and 
Policy .01.
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Fee Code PA
    The Exchange proposes to reduce the rebate for fee code PA, under 
which a Member is currently receiving a rebate of $0.40 per contract 
for its Professional orders in Penny Pilot Securities. The Exchange 
proposes to reduce the rebate for fee code PA from $0.40 per contract 
to $0.25 per contract. The Exchange also proposes to update the 
Standard Rate table to reflect the new rebate.
New Professional Penny Pilot Add Volume Tier
    The Exchange currently offers one tier under footnote 9, 
Professional Penny Pilot Add Volume Tier. Under that tier (to be 
renamed Tier 2), a Member receives a rebate of $0.43 per contract for 
its orders that yield fee code PA where it has a combined ADAV \8\ in 
Customer \9\ and Professional orders equal to or greater than 0.20% of 
average TCV.\10\ The Exchange now proposes to add a new tier under 
footnote 9 to be named Tier 1, under which a Member would receive a 
rebate of $0.40 per contract for its orders that yield fee code PA 
where it has an ADV \11\ equal to or greater than 0.25% of average TCV. 
The current tier under footnote 9 would be renamed Tier 2.
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    \8\ As set forth in the Exchange's fee schedule, ``ADAV'' means 
average daily volume calculated as the number of contracts added per 
day.
    \9\ As set forth in the Exchange's fee schedule, 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.
    \10\ As set forth in the Exchange's fee schedule, ``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.
    \11\ As set forth in the Exchange's fee schedule, ``ADV'' means 
average daily volume calculated as the number of contracts added or 
removed, combined, per day.
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Customer Add Volume Tier 5
    Customer orders that add liquidity on the Exchange in Penny Pilot 
Securities yield fee code PY and receive a standard rebate of $0.25 per 
contract. In addition, footnote 1 of the fee schedule currently sets 
forth eight different types of Customer Penny Pilot Add Tiers, each 
providing an enhanced rebate ranging from $0.40 to $0.53 per contract 
to a Member's Customer orders that yield fee code PY upon satisfying 
monthly volume criteria required by the respective tier.
    The Exchange proposes to amend Customer Add Volume Tier 5 to amend 
the qualification criteria for the tier. In order to qualify for 
Customer Add Volume Tier 5 and receive a rebate of $0.53 per contract, 
the Exchange currently requires a Member to: (1) Have an ADAV in 
Customer orders equal to or greater than 0.80% of average TCV; and (2) 
have an ADAV in Market Maker \12\ orders equal to or greater than

[[Page 46726]]

0.30% of average TCV. The Exchange proposes to reduce the first prong 
of the qualifying criteria to require a Member to have an ADAV in 
Customer orders equal to or greater than 0.60% of average TCV. In 
addition, the Exchange proposes to add a third prong to the qualifying 
criteria to require that the Member have an ADV equal to or greater 
than 0.30% of average TCV on the Exchange's equity platform (``BZX 
Equities''). The Exchange notes that no changes are required to the 
Standard Rates table of the fee schedule in connection with the changes 
to footnote 1.
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    \12\ As set forth in the Exchange's fee schedule, 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).
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Non-Customer Add Volume Tier 1
    Non-Customer \13\ orders that remove liquidity from the Exchange in 
Penny Pilot Securities yield fee code PP and are charged a standard fee 
of $0.50 per contract. In addition, footnote 3 of the fee schedule 
currently sets forth four [sic] different types of Non-Customer Penny 
Pilot Take Volume Tiers, each providing a reduced fee ranging from 
$0.44 to $0.47 per contract to a Member's Non-Customer orders that 
yield fee code PP upon satisfying monthly volume criteria required by 
the respective tier.
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    \13\ As set forth in the Exchange's fee schedule, the term 
``Non-Customer'' applies to any transaction that is not a Customer 
order.
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    The Exchange proposes to amend the Non-Customer Take Volume Tier 1 
to amend the qualification criteria for the tier. In order to qualify 
for current Non-Customer Take Volume Tier 1, the Exchange currently 
requires a Member to: (1) Have an ADAV in Customer orders equal to or 
greater than 0.80% of average TCV; and (2) have an ADAV in Market Maker 
orders equal to or greater than 0.30% of average TCV. The Exchange 
proposes to reduce the first prong of the qualifying criteria to 
require a Member have an ADAV in Customer orders equal to or greater 
than 0.60% of average TCV. In addition, the Exchange proposes to add a 
third prong to the qualifying criteria to require that the Member have 
an ADV equal to or greater than 0.30% of average TCV on BZX Equities. 
The Exchange notes that no changes are required to the Standard Rates 
table of the fee schedule in connection with the changes to footnote 3.
Step-Up Tier Amendments
    The Exchange proposes to rename and ease the qualifications for 
the: (i) Firm, Broker Dealer, and Joint Back Office Penny Pilot Add 
Volume Step-Up Tier under footnote 2; (ii) Firm, Broker Dealer, and 
Joint Back Office Non-Penny Pilot Add Volume Step-Up Tier under 
footnote 8; and (iii) the Away Market Penny Pilot Add Volume Step-Up 
Tier under footnote 10. The Exchange also proposes to ease the criteria 
for the NBBO Setter Tier 3 under footnote 4. Each of the above tiers 
include the same criteria under which a Member must have an: (i) 
Options Step-Up Add TCV \14\ in Non-Customer orders from March 2015 
baseline equal to or greater than 0.15%; and (ii) ADAV in Away Market 
Maker/Firm/Broker-Dealer/Joint Back Office orders equal to or greater 
than 0.30% of average TCV. Upon satisfying the tier's criteria, the 
Member would receive an enhanced rebate of $0.43 per contract, $0.67 
per contract, $0.43 per contract, and $0.04 per contract under the 
Firm, Broker Dealer, and Joint Back Office Penny Pilot Add Volume Step-
Up Tier, Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add 
Volume Step-Up Tier, the Away Market Penny Pilot Add Volume Step-Up 
Tier, and the NBBO Setter Tier 3, respectively.
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    \14\ As set forth in the Exchange's fee schedule, ``Options 
Step-Up TCV'' means ``ADAV as a percentage of TCV in the relevant 
baseline month subtracted from current ADAV as a percentage of 
TCV.''
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    The Exchange now proposes to ease the first prong of each of the 
above tier's criteria by replacing the requirement that the Member have 
an Options Step-Up Add TCV in Non-Customer orders from March 2015 
baseline equal to or greater than 0.15% with a new requirement that the 
Member have an ADV equal to or greater than 0.40% of average TCV. The 
Exchange does not propose to amend the second prong of each of the 
above tiers as Members would continue to be required to have an ADAV in 
Away Market Maker/Firm/Broker-Dealer/Joint Back Office orders equal to 
or greater than 0.30% of average TCV.
    In light of removing the monthly baseline step-up requirement, the 
Exchange proposes to rename the Firm, Broker Dealer, and Joint Back 
Office Penny Pilot Add Volume Step-Up Tier, the Firm, Broker Dealer, 
and Joint Back Office Non-Penny Pilot Add Volume Step-Up Tier, and the 
Away Market Penny Pilot Add Volume Step-Up Tier as follows:
     The Firm, Broker Dealer, and Joint Back Office Penny Pilot 
Add Volume Step-Up Tier would be renamed as the ``the Firm, Broker 
Dealer, and Joint Back Office Penny Pilot Add Volume Tier 2'';
     the Firm, Broker Dealer, and Joint Back Office Non-Penny 
Pilot Add Volume Step-Up Tier would be renamed as the ``the Firm, 
Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tier 
3''; and
     the Away Market Penny Pilot Add Volume Step-Up Tier would 
be renamed as the ``the Away Market Penny Pilot Add Volume Tier 3''.

The Exchange does not propose to amend the name of the NBBO Setter Tier 
3.
Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule July 1, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6 of the Act,\15\ in general, and 
furthers the objectives of section 6(b)(4),\16\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange also 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 at a particular 
venue to be excessive. The proposed rule change reflects a competitive 
pricing structure designed to incentivize market participants to direct 
their order flow to the Exchange. The Exchange believes that the 
proposed tier is equitable and non-discriminatory in that it would 
apply uniformly to all Members. The Exchange believes the rates remain 
competitive with those charged by other venues and, therefore, are 
reasonable and equitably allocated to Members.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to change the standard fee 
charged for Professional orders under fee code PA is reasonable, fair 
and equitable and non-discriminatory, because the change will apply 
equally to all participants, and because, while the change marks a 
decrease in the rebate for Professional orders in Penny Pilot 
Securities, such 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 and will allow the Exchange to 
earn additional revenue that can be used to offset the addition of new 
pricing incentives, such as the new Professional Penny Pilot Add Volume 
Tier introduced as part of this proposal.
    The Exchange believes that the proposed modifications to the tiered

[[Page 46727]]

pricing structure are reasonable, fair and equitable, and non-
discriminatory. The Exchange operates in a highly competitive market in 
which market participants may readily send order flow to many competing 
venues if they deem fees at the Exchange to be excessive. The proposed 
fee structure remains intended to attract order flow to the Exchange by 
offering market participants a competitive pricing structure. The 
Exchange believes it is reasonable to offer and incrementally modify 
incentives intended to help to contribute to the growth of the 
Exchange.
    Volume-based rebates such as that proposed herein have been widely 
adopted by exchanges, including the Exchange, 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: (i) The value to 
an exchange's market quality; (ii) associated higher levels of market 
activity, such as higher levels of liquidity provisions and/or growth 
patterns; and (iii) introduction of higher volumes of orders into the 
price and volume discovery processes.
    The proposed addition of an additional Professional Penny Pilot Add 
Volume Tier is broadly intended to incentivize participants to increase 
their participation on the Exchange, which will increase the liquidity 
and market quality on the Exchange. Thus, the Exchange believes that 
the proposed tier is reasonable, fair and equitable, and non-
discriminatory, for the reasons set forth above with respect to volume-
based pricing generally and because such changes will incentivize 
participants to further contribute to market quality. The Exchange also 
believes the rebate of $0.40 per contract is reasonable as compared to 
the existing tier under footnote 9. Currently, to receive a rebate of 
$0.43 per contract for orders that yield fee code PA, the Member must 
have a combined ADAV in Customer and Professional orders equal to or 
greater than 0.20% of average TCV. Under the proposed tier, the Member 
would receive a rebate of $0.40 per contract for its orders that yield 
fee code PA where it has an ADV equal to or greater than 0.25% of 
average TCV. The Exchange, therefore, believes that the lower rebate is 
equitable and reasonable as it correlates to the proposed tier's 
pricing structure and the criteria necessary to achieve the existing 
tier under footnote 9.
    The proposed modifications to the criteria required to qualify for 
current Customer Add Volume Tier 5 and Non-Customer Penny Pilot Take 
Volume Tier 1 are intended to incentivize additional Members to send 
Customer orders and/or Market Maker orders to the Exchange in an effort 
to qualify for the enhanced rebate or lower fee made available by the 
tiers. The Exchange believes that the proposal to require that the 
Member have an ADV equal to or greater than 0.30% of average TCV on BZX 
Equities under both tiers is a reasonable, fair and equitable, and not 
unfairly discriminatory allocation of fees and rebates because it will 
provide Members with an additional incentive to reach certain 
thresholds on both BZX Options and BZX Equities. The increased 
liquidity from this proposal also benefits all investors by deepening 
the BZX Options and BZX Equities liquidity pools, offering additional 
flexibility for all investors to enjoy cost savings, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection. Such pricing programs thereby reward a Member's 
growth pattern on the Exchange and such increased volume increases 
potential revenue to the Exchange, and will allow the Exchange to 
continue to provide and potentially expand the incentive programs 
operated by the Exchange. To the extent a Member participates on BZX 
Options and not BZX Equities, the Exchange believes that the proposal 
is still reasonable, equitably allocated and non-discriminatory with 
respect to such Member based on the overall benefit to the Exchange 
resulting from the success of BZX Options. As noted above, such success 
allows the Exchange to continue to provide and potentially expand its 
existing incentive programs to the benefit of all participants on the 
Exchange, whether they participate on BZX Options or not. The proposed 
pricing program is also fair and equitable in that membership in BZX 
Options is available to all market participants which would provide 
them with access to the benefits on BZX Options provided by the 
proposed changes, as described above, even where a member of BZX 
Options is not necessarily eligible for the proposed increased rebates 
on the Exchange. Further, the proposed changes will result in Members 
receiving either the same or an increased rebate than they would 
currently receive.
    The proposed amendments to the Firm, Broker Dealer, and Joint Back 
Office Penny Pilot Add Volume Step-Up Tier, Firm, Broker Dealer, and 
Joint Back Office Non-Penny Pilot Add Volume Step-Up Tier, Away Market 
Penny Pilot Add Volume Step-Up Tier and, the NBBO Setter Tier 3 are 
also are intended to incentivize additional Members to send orders to 
the Exchange in an effort to qualify for the enhanced rebate made 
available by the tiers. The Exchange notes that requiring improvement 
over a March 2015 baseline has become outdated and has prevented 
Members from seeking to achieve each tier's criteria. Therefore, the 
Exchange believes it is equitable and reasonable to replace the current 
March 2015 baseline with a requirement that Members have an ADV equal 
to or greater than 0.40% of average TCV. The Exchange believes the 
proposed change to each tier's criteria is consistent with the Act. The 
Exchange also believes renaming the Firm, Broker Dealer, and Joint Back 
Office Penny Pilot Add Volume Step-Up Tier, the Firm, Broker Dealer, 
and Joint Back Office Non-Penny Pilot Add Volume Step-Up Tier, and the 
Away Market Penny Pilot Add Volume Step-Up Tier is also reasonable 
because each tier would no longer require a step-up in volume based on 
a March 2015 baseline.

(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. The Exchange also believes the proposal enhances competition 
by seeking to draw additional volume to both BZX Equities and BZX 
Options. Therefore, the Exchange believes that the amendment to the 
tiers' thresholds contributes to, rather than burdens competition, as 
such change is intended to incentivize participants to increase their 
participation on the Exchange.

[[Page 46728]]

(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.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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-2016-36 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-2016-36. 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 Number SR-BatsBZX-2016-36 and should 
be submitted on or before August 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16849 Filed 7-15-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46725

designates August 29, 2016 as the date at www.batstrading.com, at the proposes to update the Standard Rate
by which the Commission shall either principal office of the Exchange, and at table to reflect the new rebate.
approve or disapprove or institute the Commission’s Public Reference
New Professional Penny Pilot Add
proceedings to determine whether to Room.
Volume Tier
disapprove the proposed rule change
II. Self-Regulatory Organization’s The Exchange currently offers one tier
(File Number SR–NASDAQ–2016–071).
Statement of the Purpose of, and under footnote 9, Professional Penny
For the Commission, by the Division of Statutory Basis for, the Proposed Rule
Trading and Markets, pursuant to delegated Pilot Add Volume Tier. Under that tier
Change (to be renamed Tier 2), a Member
authority.7
Robert W. Errett, In its filing with the Commission, the receives a rebate of $0.43 per contract
Deputy Secretary. Exchange included statements for its orders that yield fee code PA
concerning the purpose of and basis for where it has a combined ADAV 8 in
[FR Doc. 2016–16851 Filed 7–15–16; 8:45 am]
the proposed rule change and discussed Customer 9 and Professional orders
BILLING CODE 8011–01–P
any comments it received on the equal to or greater than 0.20% of
proposed rule change. The text of these average TCV.10 The Exchange now
statements may be examined at the proposes to add a new tier under
SECURITIES AND EXCHANGE
places specified in Item IV below. The footnote 9 to be named Tier 1, under
COMMISSION
Exchange has prepared summaries, set which a Member would receive a rebate
[Release No. 34–78305; File No. SR– forth in sections A, B, and C below, of of $0.40 per contract for its orders that
BatsBZX–2016–36] yield fee code PA where it has an
the most significant parts of such
statements. ADV 11 equal to or greater than 0.25% of
Self-Regulatory Organizations; Bats average TCV. The current tier under
BZX Exchange, Inc.; Notice of Filing (A) Self-Regulatory Organization’s footnote 9 would be renamed Tier 2.
and Immediate Effectiveness of a Statement of the Purpose of, and
Proposed Rule Change Related to Fees Statutory Basis for, the Proposed Rule Customer Add Volume Tier 5
for Use of Bats BZX Exchange, Inc. Change Customer orders that add liquidity on
July 12, 2016. the Exchange in Penny Pilot Securities
1. Purpose
Pursuant to section 19(b)(1) of the yield fee code PY and receive a standard
The Exchange proposes to amend its rebate of $0.25 per contract. In addition,
Securities Exchange Act of 1934 (the
fee schedule for its equity options footnote 1 of the fee schedule currently
‘‘Act’’),1 and Rule 19b–4 thereunder,2
platform (‘‘BZX Options’’) to: (i) Reduce sets forth eight different types of
notice is hereby given that on July 1,
the rate for fee code PA, which is Customer Penny Pilot Add Tiers, each
2016, Bats BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the appended to Professional 6 orders in providing an enhanced rebate ranging
Securities and Exchange Commission Penny Pilot Securities; 7 (ii) add a new from $0.40 to $0.53 per contract to a
(‘‘Commission’’) the proposed rule tier under footnote 9, Professional Member’s Customer orders that yield fee
change as described in Items I, II and III Penny Pilot Add Volume Tiers; (iii) to code PY upon satisfying monthly
below, which Items have been prepared modify the criteria for the Customer volume criteria required by the
by the Exchange. The Exchange has Penny Pilot Add Tier 5 under footnote respective tier.
designated the proposed rule change as 1; and (iv) to modify the criteria for the The Exchange proposes to amend
one establishing or changing a member Non-Customer Penny Pilot Take Volume Customer Add Volume Tier 5 to amend
due, fee, or other charge imposed by the Tier 1 under footnote 3. Additionally, the qualification criteria for the tier. In
Exchange under section 19(b)(3)(A)(ii) the Exchange proposes to rename and order to qualify for Customer Add
of the Act 3 and Rule 19b–4(f)(2) ease the qualifications for the: (i) Firm, Volume Tier 5 and receive a rebate of
thereunder,4 which renders the Broker Dealer, and Joint Back Office $0.53 per contract, the Exchange
proposed rule change effective upon Penny Pilot Add Volume Step-Up Tier currently requires a Member to: (1) Have
filing with the Commission. The under footnote 2; (ii) Firm, Broker an ADAV in Customer orders equal to
Commission is publishing this notice to Dealer, and Joint Back Office Non-Penny or greater than 0.80% of average TCV;
solicit comments on the proposed rule Pilot Add Volume Step-Up Tier under and (2) have an ADAV in Market
change from interested persons. footnote 8; and (iii) the Away Market Maker 12 orders equal to or greater than
Penny Pilot Add Volume Step-Up Tier
I. Self-Regulatory Organization’s under footnote 10. The Exchange also 8 As set forth in the Exchange’s fee schedule,

Statement of the Terms of Substance of proposes to ease the criteria for the ‘‘ADAV’’ means average daily volume calculated as
the Proposed Rule Change the number of contracts added per day.
NBBO Setter Tier 3 under footnote 4. 9 As set forth in the Exchange’s fee schedule, the

The Exchange filed a proposal to Fee Code PA term ‘‘Customer’’ applies to any transaction
amend the fee schedule applicable to identified by a Member for clearing in the Customer
Members 5 and non-members of the The Exchange proposes to reduce the range at the Options Clearing Corporation (‘‘OCC’’),
rebate for fee code PA, under which a excluding any transaction for a Broker Dealer or a
Exchange pursuant to BZX Rules 15.1(a) ‘‘Professional’’ as defined in Exchange Rule 16.1.
and (c). Member is currently receiving a rebate 10 As set forth in the Exchange’s fee schedule,

The text of the proposed rule change of $0.40 per contract for its Professional ‘‘TCV’’ means total consolidated volume calculated
is available at the Exchange’s Web site orders in Penny Pilot Securities. The as the volume reported by all exchanges to the
Exchange proposes to reduce the rebate consolidated transaction reporting plan for the
asabaliauskas on DSK3SPTVN1PROD with NOTICES

month for which the fees apply.
7 17 CFR 200.30–3(a)(31). for fee code PA from $0.40 per contract 11 As set forth in the Exchange’s fee schedule,
1 15 U.S.C. 78s(b)(1). to $0.25 per contract. The Exchange also ‘‘ADV’’ means average daily volume calculated as
2 17 CFR 240.19b–4.
the number of contracts added or removed,
3 15 U.S.C. 78s(b)(3)(A)(ii). 6 The term ‘‘Professional’’ applies to any combined, per day.
4 17 CFR 240.19b–4(f)(2). transaction identified by a Member as such 12 As set forth in the Exchange’s fee schedule, the
5 The term ‘‘Member’’ is defined as ‘‘any pursuant to Exchange Rule 16.1. term ‘‘Market Maker’’ applies to any transaction
registered broker or dealer that has been admitted 7 The term ‘‘Penny Pilot Security’’ applies to identified by a Member for clearing in the Market
to membership in the Exchange.’’ See Exchange those issues that are quoted pursuant to Exchange Maker range at the OCC, where such Member is
Rule 1.5(n). Rule 21.5, Interpretation and Policy .01. Continued

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46726 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices

0.30% of average TCV. The Exchange Dealer, and Joint Back Office Non-Penny Joint Back Office Non-Penny Pilot Add
proposes to reduce the first prong of the Pilot Add Volume Step-Up Tier under Volume Tier 3’’; and
qualifying criteria to require a Member footnote 8; and (iii) the Away Market • the Away Market Penny Pilot Add
to have an ADAV in Customer orders Penny Pilot Add Volume Step-Up Tier Volume Step-Up Tier would be renamed
equal to or greater than 0.60% of under footnote 10. The Exchange also as the ‘‘the Away Market Penny Pilot
average TCV. In addition, the Exchange proposes to ease the criteria for the Add Volume Tier 3’’.
proposes to add a third prong to the NBBO Setter Tier 3 under footnote 4. The Exchange does not propose to
qualifying criteria to require that the Each of the above tiers include the same amend the name of the NBBO Setter
Member have an ADV equal to or greater criteria under which a Member must Tier 3.
than 0.30% of average TCV on the have an: (i) Options Step-Up Add
Exchange’s equity platform (‘‘BZX TCV 14 in Non-Customer orders from Implementation Date
Equities’’). The Exchange notes that no March 2015 baseline equal to or greater The Exchange proposes to implement
changes are required to the Standard than 0.15%; and (ii) ADAV in Away these amendments to its fee schedule
Rates table of the fee schedule in Market Maker/Firm/Broker-Dealer/Joint July 1, 2016.
connection with the changes to footnote Back Office orders equal to or greater 2. Statutory Basis
1. than 0.30% of average TCV. Upon
satisfying the tier’s criteria, the Member The Exchange believes that the
Non-Customer Add Volume Tier 1 proposed rule change is consistent with
would receive an enhanced rebate of
Non-Customer 13 orders that remove $0.43 per contract, $0.67 per contract, the objectives of section 6 of the Act,15
liquidity from the Exchange in Penny $0.43 per contract, and $0.04 per in general, and furthers the objectives of
Pilot Securities yield fee code PP and contract under the Firm, Broker Dealer, section 6(b)(4),16 in particular, as it is
are charged a standard fee of $0.50 per and Joint Back Office Penny Pilot Add designed to provide for the equitable
contract. In addition, footnote 3 of the Volume Step-Up Tier, Firm, Broker allocation of reasonable dues, fees and
fee schedule currently sets forth four Dealer, and Joint Back Office Non-Penny other charges among its Members and
[sic] different types of Non-Customer Pilot Add Volume Step-Up Tier, the other persons using its facilities. The
Penny Pilot Take Volume Tiers, each Away Market Penny Pilot Add Volume Exchange also notes that it operates in
providing a reduced fee ranging from Step-Up Tier, and the NBBO Setter Tier a highly-competitive market in which
$0.44 to $0.47 per contract to a 3, respectively. market participants can readily direct
Member’s Non-Customer orders that The Exchange now proposes to ease order flow to competing venues if they
yield fee code PP upon satisfying the first prong of each of the above tier’s deem fee levels at a particular venue to
monthly volume criteria required by the criteria by replacing the requirement be excessive. The proposed rule change
respective tier. that the Member have an Options Step- reflects a competitive pricing structure
The Exchange proposes to amend the Up Add TCV in Non-Customer orders designed to incentivize market
Non-Customer Take Volume Tier 1 to from March 2015 baseline equal to or participants to direct their order flow to
amend the qualification criteria for the greater than 0.15% with a new the Exchange. The Exchange believes
tier. In order to qualify for current Non- requirement that the Member have an that the proposed tier is equitable and
Customer Take Volume Tier 1, the ADV equal to or greater than 0.40% of non-discriminatory in that it would
Exchange currently requires a Member average TCV. The Exchange does not apply uniformly to all Members. The
to: (1) Have an ADAV in Customer propose to amend the second prong of Exchange believes the rates remain
orders equal to or greater than 0.80% of each of the above tiers as Members competitive with those charged by other
average TCV; and (2) have an ADAV in would continue to be required to have venues and, therefore, are reasonable
Market Maker orders equal to or greater an ADAV in Away Market Maker/Firm/ and equitably allocated to Members.
than 0.30% of average TCV. The Broker-Dealer/Joint Back Office orders The Exchange believes that its
Exchange proposes to reduce the first equal to or greater than 0.30% of proposal to change the standard fee
prong of the qualifying criteria to average TCV. charged for Professional orders under
require a Member have an ADAV in In light of removing the monthly fee code PA is reasonable, fair and
Customer orders equal to or greater than baseline step-up requirement, the equitable and non-discriminatory,
0.60% of average TCV. In addition, the Exchange proposes to rename the Firm, because the change will apply equally to
Exchange proposes to add a third prong Broker Dealer, and Joint Back Office all participants, and because, while the
to the qualifying criteria to require that Penny Pilot Add Volume Step-Up Tier, change marks a decrease in the rebate
the Member have an ADV equal to or the Firm, Broker Dealer, and Joint Back for Professional orders in Penny Pilot
greater than 0.30% of average TCV on Office Non-Penny Pilot Add Volume Securities, such proposed rebate
BZX Equities. The Exchange notes that Step-Up Tier, and the Away Market remains consistent with pricing
no changes are required to the Standard Penny Pilot Add Volume Step-Up Tier previously offered by the Exchange as
Rates table of the fee schedule in as follows: well as competitors of the Exchange and
connection with the changes to footnote • The Firm, Broker Dealer, and Joint does not represent a significant
3. Back Office Penny Pilot Add Volume departure from the Exchange’s general
Step-Up Tier would be renamed as the pricing structure and will allow the
Step-Up Tier Amendments
‘‘the Firm, Broker Dealer, and Joint Back Exchange to earn additional revenue
The Exchange proposes to rename and Office Penny Pilot Add Volume Tier 2’’; that can be used to offset the addition
ease the qualifications for the: (i) Firm, • the Firm, Broker Dealer, and Joint
asabaliauskas on DSK3SPTVN1PROD with NOTICES

of new pricing incentives, such as the
Broker Dealer, and Joint Back Office Back Office Non-Penny Pilot Add new Professional Penny Pilot Add
Penny Pilot Add Volume Step-Up Tier Volume Step-Up Tier would be renamed Volume Tier introduced as part of this
under footnote 2; (ii) Firm, Broker as the ‘‘the Firm, Broker Dealer, and proposal.
The Exchange believes that the
registered with the Exchange as a Market Maker as 14 As set forth in the Exchange’s fee schedule,
defined in Rule 16.1(a)(37). proposed modifications to the tiered
‘‘Options Step-Up TCV’’ means ‘‘ADAV as a
13 As set forth in the Exchange’s fee schedule, the percentage of TCV in the relevant baseline month
15 15 U.S.C. 78f.
term ‘‘Non-Customer’’ applies to any transaction subtracted from current ADAV as a percentage of
that is not a Customer order. TCV.’’ 16 15 U.S.C. 78f(b)(4).

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46728 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices

(C) Self-Regulatory Organization’s Commission and any person, other than eliminated position and exercise limits
Statement on Comments on the those that may be withheld from the for physically-settled options on the
Proposed Rule Change Received From public in accordance with the SPDR S&P ETF Trust (‘‘SPY’’) (‘‘SPY
Members, Participants or Others provisions of 5 U.S.C. 552, will be Pilot Program’’). The text of the
The Exchange has not solicited, and available for Web site viewing and proposed rule change is available on the
does not intend to solicit, comments on printing in the Commission’s Public Exchange’s Web site (http://
this proposed rule change. The Reference Room, 100 F Street NE., www.ise.com), at the principal office of
Exchange has not received any written Washington, DC 20549, on official the Exchange, and at the Commission’s
comments from members or other business days between the hours of Public Reference Room.
interested parties. 10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for II. Self-Regulatory Organization’s
III. Date of Effectiveness of the inspection and copying at the principal Statement of the Purpose of, and
Proposed Rule Change and Timing for office of the Exchange. All comments Statutory Basis for, the Proposed Rule
Commission Action received will be posted without change; Change
The foregoing rule change has become the Commission does not edit personal In its filing with the Commission, the
effective pursuant to section 19(b)(3)(A) identifying information from self-regulatory organization included
of the Act 17 and paragraph (f) of Rule submissions. You should submit only statements concerning the purpose of,
19b–4 thereunder.18 At any time within information that you wish to make and basis for, the proposed rule change
60 days of the filing of the proposed rule available publicly. All submissions and discussed any comments it received
change, the Commission summarily may should refer to File Number SR– on the proposed rule change. The text
temporarily suspend such rule change if BatsBZX–2016–36 and should be of these statements may be examined at
it appears to the Commission that such submitted on or before August 8, 2016. the places specified in Item IV below.
action is necessary or appropriate in the For the Commission, by the Division of The self-regulatory organization has
public interest, for the protection of Trading and Markets, pursuant to delegated prepared summaries, set forth in
investors, or otherwise in furtherance of authority.19 sections A, B and C below, of the most
the purposes of the Act. Robert W. Errett, significant aspects of such statements.
IV. Solicitation of Comments Deputy Secretary. A. Self-Regulatory Organization’s
[FR Doc. 2016–16849 Filed 7–15–16; 8:45 am] Statement of the Purpose of, and
Interested persons are invited to
submit written data, views, and
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
arguments concerning the foregoing, Change
including whether the proposed rule SECURITIES AND EXCHANGE 1. Purpose
change is consistent with the Act. COMMISSION The Exchange proposes to amend
Comments may be submitted by any of
[Release No. 34–78295; File No. SR–ISE– Supplementary Material .01 to Rule 412
the following methods:
2016–16] and Supplementary Material .01 to Rule
Electronic Comments 414 to extend the duration of the SPY
• Use the Commission’s Internet Self-Regulatory Organizations; Pilot Program through July 12, 2017.
comment form (http://www.sec.gov/ International Securities Exchange, This filing does not propose any
LLC; Notice of Filing and Immediate substantive changes to the SPY Pilot
rules/sro.shtml); or
• Send an email to rule-comments@ Effectiveness of Proposed Rule Program. In proposing to extend the
sec.gov. Please include File Number SR– Change To Extend the SPY Pilot SPY Pilot Program, the Exchange
BatsBZX–2016–36 on the subject line. Program reaffirms its consideration of several
July 12, 2016.
factors that supported the original
Paper Comments proposal of the SPY Pilot Program,
Pursuant to section 19(b)(1) of the
• Send paper comments in triplicate Securities Exchange Act of 1934 (the including (1) the liquidity of the option
to Secretary, Securities and Exchange ‘‘Act’’),1 and Rule 19b–4 thereunder,2 and the underlying security, (2) the
Commission, 100 F Street NE., notice is hereby given that on July 7, market capitalization of the underlying
Washington, DC 20549–1090. 2016, the International Securities security and the related index, (3) the
All submissions should refer to File Exchange, LLC (the ‘‘Exchange’’ or the reporting of large positions and
Number SR–BatsBZX–2016–36. This file ‘‘ISE’’) filed with the Securities and requirements surrounding margin, and
number should be included on the Exchange Commission (‘‘Commission’’) (4) financial requirements imposed by
subject line if email is used. To help the the proposed rule change as described ISE and the Commission.
Commission process and review your With this proposed extension to the
in Items I and II below, which Items
comments more efficiently, please use SPY Pilot Program, the Exchange has
have been prepared by the self-
only one method. The Commission will submitted a report to the Commission
regulatory organization. The
post all comments on the Commission’s reflecting the trading of standardized
Commission is publishing this notice to
Internet Web site (http://www.sec.gov/ SPY options without position limits
solicit comments on the proposed rule
rules/sro.shtml). Copies of the from January through May 2016. The
change from interested persons.
submission, all subsequent report was prepared in the manner
I. Self-Regulatory Organization’s specified in the filing extending the SPY
asabaliauskas on DSK3SPTVN1PROD with NOTICES

amendments, all written statements
with respect to the proposed rule Statement of the Terms of the Substance Pilot Program to the current pilot end
change that are filed with the of the Proposed Rule Change date of July 12, 2016. The Exchange
Commission, and all written The ISE proposes to amend its rules notes that it is unaware of any problems
communications relating to the to extend the pilot program that created by the SPY Pilot Program and
proposed rule change between the does not foresee any as a result of the
19 17 CFR 200.30–3(a)(12). proposed extension. The proposed
17 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). extension will allow the Exchange and
18 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4. the Commission to further evaluate the

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Document Created: 2016-07-16 02:28:22
Document Modified: 2016-07-16 02:28:22
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 46725