81 FR 62226 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 174 (September 8, 2016)

[Federal Register Volume 81, Number 174 (Thursday, September 8, 2016)]
[Notices]
[Pages 62226-62228]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78748; File No. SR-BatsEDGA-2016-20]


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

September 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 August 19, 2016, Bats EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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 rule change to amend the fee schedule 
applicable to Members and non-Members \5\ of the Exchange pursuant to 
Exchange Rules 15.1(a) and (c). Specifically, the Exchange proposes to 
adopt new fee code IX, which would be appended to all orders that are 
routed to the Investors Exchange, Inc. (``IEX'') using the using the 
Destination Specific (``DIRC'') routing strategy.\6\
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    \5\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
    \6\ See Exchange Rule 11.11(g)(14).
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission has approved IEX as a registered national securities 
exchange,\7\ which is to begin a symbol-by-symbol roll out of symbols 
on August 19, 2016.\8\ As of that date, the Exchange will begin routing 
orders to IEX and Members may elect that their orders be routed 
directly to IEX using the DIRC routing strategy. The Exchange, 
therefore, proposes to amend its fee schedule to adopt new fee code IX, 
which would be appended to all orders that are routed to IEX using the 
DIRC routing strategy. Orders yielding fee code IX in securities priced 
at or above $1.00 will be charged a fee of $0.0010 per share. Orders 
yielding fee code IX in securities priced below $1.00 will charged 
0.30% of the transaction's dollar value.
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    \7\ See Securities Exchange Act Release No. 78101 (June 17, 
2016), 81 FR 41141 (June 23, 2016) (``IEX Approval Order'').
    \8\ See Letter from Brad Katsuyama, CEO, IEX, to IEX's Sell-Side 
and Buy-Side Partners, dated June 17, 2016 (https://www.iextrading.com/) (stating that IEX will commence a symbol-by-
symbol roll-out on August 19, 2016, concluding on September 2, 
2016).
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    The proposed change would enable the Exchange to charge a rate 
reasonably related to the rate that Bats Trading, Inc. (``Bats 
Trading''), the Exchange's affiliated routing broker-dealer, would be 
charged for routing orders to IEX, when it does not qualify for a 
volume tier reduced fee.\9\ As a result, when Bats Trading routes an 
order to IEX which removes liquidity against a non-displayed order, it 
will be charged a standard rate of $0.0009 per share in securities 
priced at or above $1.00 and

[[Page 62227]]

0.30% of the transaction's dollar value in securities priced below 
$1.00.\10\ Bats Trading will not be charged a fee for orders it routes 
to IEX which remove liquidity against a displayed order.\11\ Bats 
Trading will pass through these rates to the Exchange and the Exchange, 
in turn, will charge a rate of $0.0010 per share for orders in 
securities priced at or above $1.00 and 0.30% of the transaction's 
dollar value for orders in securities less than $1.00. The Exchange 
notes it would not be able to control whether the order it routes to 
IEX executes against displayed or non-displayed liquidity, and 
therefore, propose to charge a fee for orders that yield fee code IX 
based on IEX's rates for removing non-displayed liquidity. The proposed 
fee under fee code IX would enable the Exchange to equitably allocate 
its costs among all Members utilizing fee code IX.
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    \9\ The Exchange notes that IEX does not currently offer volume 
tiered pricing.
    \10\ See IEX fee schedule available at https://iextrading.com/trading/#fee-schedule (effective August 19, 2016). See also IEX 
Trading Alert #2016-036, Investors Exchange Fee Schedule Effective 
August 19, 2016, available at https://iextrading.com/trading/alerts/2016/036/.
    \11\ Id.
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    The Exchange proposes to implement this amendment to its fee 
schedule on August 19, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ 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 believes that by allowing customers to route 
specifically to IEX through Bats Trading, as it does with the other 
exchanges, fee code IX represents an equitable allocation of reasonable 
dues, fees, and other charges among Members and other persons using its 
facilities. As of August 19, 2016, IEX will charge a fee of $0.0009 per 
share for orders which remove liquidity against non-displayed orders 
and no fee for orders that remove liquidity against displayed 
order.\14\ Because the Exchange would not be able to control whether 
the order it routes to IEX executes against displayed or non-displayed 
liquidity, it therefore, believes it is equitable and reasonable to 
charge a fee for orders that yield fee code IX based on IEX's rates for 
removing non-displayed interest. The Exchange further believes that its 
proposal to pass through a fee of $0.0010 per share is equitable and 
reasonable because it accounts for the prices charged by IEX plus the 
additional operation expenses that would be incurred by the Exchange in 
routing orders to IEX.\15\ Furthermore, the Exchange notes that routing 
through Bats Trading is voluntary and Members may utilize other avenues 
to route orders to IEX, such as connecting to IEX directly. Lastly, the 
Exchange also believes that the proposed fee code is non-discriminatory 
because it applies uniformly to all Members.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ See supra note 10.
    \15\ The Exchange notes that the proposed rate for fee code IX 
is lower that its standard routing fee of $0.0029 per share under 
fee code X, which it charges, for example, to orders routed to the 
National Stock Exchange, Inc. (``NSX'') which charges a lower rate 
to remove liquidity. See NSX's fee schedule available at http://nsx.com/client/pricing (charging a fee of $0.0003 per share to 
orders that remove liquidity).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    This proposed rule change does 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 this change represents a 
significant departure from previous pricing offered by the Exchange or 
from pricing offered by the Exchange's competitors. The proposed rate 
would apply uniformly to all Members, and 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 changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. The 
Exchange believes that its proposal to pass through a fee of $0.0010 
for Members' orders that yield fee code IX would increase intermarket 
competition by offering customers an alternative means to route to 
specifically to IEX. As stated above, routing through Bats Trading is 
voluntary and Members may utilize other avenues to route orders to IEX, 
such as connecting to IEX directly. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rate would apply uniformly to all Members.

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 unsolicited 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 \16\ and paragraph (f) of Rule 19b-4 
thereunder.\17\ 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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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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-BatsEDGA-2016-20 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-BatsEDGA-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 the filing also will be available 
for

[[Page 62228]]

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-BatsEDGA-2016-20, and should 
be submitted on or before September 29, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-21491 Filed 9-7-16; 8:45 am]
 BILLING CODE 8011-01-P