81_FR_72333 81 FR 72131 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc. Options Platform

81 FR 72131 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc. Options Platform

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 202 (October 19, 2016)

Page Range72131-72133
FR Document2016-25236

Federal Register, Volume 81 Issue 202 (Wednesday, October 19, 2016) 
[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Notices]
[Pages 72131-72133]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-25236]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79091; File No. SR-BatsEDGX-2016-57]


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

October 13, 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 October 6, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. 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.
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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 fee schedule applicable 
to Members \3\ and non-Members of the Exchange pursuant to EDGX Rules 
15.1(a) and (c).
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    \3\ 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 (``EDGX Options'') to: (i) Add definition of OCC 
Customer Volume or OCV, to the Definitions section of the fee schedule; 
and (ii) modify the criteria for the Customer Volume, Market Maker 
Volume, and Firm Penny Pilot Cross-Asset Tiers to reflect the new 
definition of OCV; and (iii) to make a non-substantive change.
OCC Customer Volume Definition
    The Exchange proposes to add the definition of ``OCC Customer 
Volume'' or ``OCV'' to the definition section of its fee schedule. OCC 
Customer Volume or OCV will be defined as the total equity and Exchange 
Traded Fund (``ETF'') options volume that clears in the Customer \4\ 
range at the Options Clearing Corporation (``OCC'') for the month for 
which the fees apply, excluding volume on any day that the Exchange 
experiences an Exchange System Disruption \5\ and on any day with a 
scheduled early market close.
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    \4\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
    \5\ An ``Exchange System Disruption'' means ``any day that the 
Exchange's system experiences a disruption that lasts for more than 
60 minutes during Regular Trading Hours.'' Id.
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Tier Qualifications Change

    The Exchange proposes to replace current tier qualifications which 
refer to Total Consolidated Volume (``TCV'') \6\ with a reference to 
OCV in the Customer Volume Tier, Market Maker Volume Tier and Firm 
Penny Pilot Cross-Asset Tier, in Footnotes 1, 2 and 4, respectively. 
Because OCV generally makes up a smaller range than the prior TCV, the 
Exchange also proposes to amend the percentage of OCV necessary to 
achieve the tier so that it is substantially identical to the 
previously required percentage of TCV. Doing so will keep each tier's 
criteria relatively unchanged from its current requirements. The rates 
for each tier are unchanged. Changes to each tier are described below.
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    \6\ Id.
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Customer Volume Tiers
    Customer orders that yield fee codes NC \7\ or PC \8\ and are given 
a standard rebate of $0.05 per contract. Footnote 1 of the fee schedule 
sets forth five tiers, each providing enhanced rebates, ranging from 
$0.10 to $0.25 per contract, to a Member's order that yield fee codes 
NC or PC upon satisfying monthly volume criteria based on an ADV \9\ in 
Customer orders equal to or greater than a percentage of average TCV.
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    \7\ Fee code NC is appended to a Member's order which removes 
liquidity (Customer), Non-Penny. Id.
    \8\ Fee code PC is appended to a Member's order which removes 
liquidity (Customer) Penny Pilot. Id.
    \9\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
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     Tier 1 currently requires that a Member have an ADV in 
Customer orders equal to or greater than 0.15% of average TCV. As 
amended, a Member must have an ADV in Customer orders equal to or 
greater than 0.20% of average OCV.
     Tier 2 currently requires that a Member have an ADV in 
Customer orders equal to or greater than 0.30% of average TCV. As 
amended, a Member must have an ADV in Customer orders equal to or 
greater than 0.40% of average OCV.
     Tier 3 currently requires that a Member have an ADV in 
Customer orders equal to or greater than 0.50% of average TCV. As 
amended, a Member must have an ADV in Customer orders equal to or 
greater than 0.65% of average OCV.
     Tier 4 currently requires that a Member has an ADV in 
Customer orders equal to or greater than 0.80% of average TCV. As 
amended, a Member must have an ADV in Customer orders equal to or 
greater than 1.05% of average OCV.
     Tier 5 currently requires that a Member have an ADV in 
Customer orders equal to or greater than 0.05% of average TCV, and an 
ADV in Customer or Market Maker \10\ orders equal to or greater than 
0.25% of average TCV. As amended, a Member must have an ADV in Customer 
orders equal to or greater than 0.05% of average OCV, and an

[[Page 72132]]

ADV in Customer or Market Maker orders equal to or greater than 0.35% 
of average OCV.
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    \10\ Id.
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Market Marker Volume Tier
    Market Maker orders yield fee codes PM \11\ or NM \12\ and are 
charged a standard fee of $0.19 per contract. Footnote 2 of the fee 
schedule sets forth seven tiers, each providing a reduced fee ranging 
from $0.01 to $0.16 per contract to a Member's order that yield fee 
code PM or NM upon satisfying monthly volume criteria based on a Member 
having an ADV in Market Maker orders equal to or greater than a 
percentage of average TCV.
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    \11\ Fee code PM is appended to a Members order which adds 
liquidity (MM), Penny Pilot. Id.
    \12\ Fee code NM is appended to a Members order which adds 
liquidity (MM), Non-Penny. Id.
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     Tier 1 currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 0.05% of average TCV. As 
amended, a Member must have an ADV in Market Maker orders equal to or 
greater than 0.05% of average OCV.\13\
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    \13\ The Exchange proposes to retain the 0.05% requirement as 
adjusting that number to reflect replacing TCV with OCV will result 
in a de minimmis change in the percentage.
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     Tier 2 currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 0.10% of average TCV. The 
equivalent proposed calculation would require that a Member has an ADV 
in Market Maker orders equal to or greater than 0.15% of average OCV.
     Tier 3 Currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 0.20% of average TCV. As 
amended, a Member must have an ADV in Market Maker orders equal to or 
greater than 0.25% of average OCV.
     Tier 4 currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 0.30% of average TCV. As 
amended, a Member must have an ADV in Market Maker orders equal to or 
greater than 0.40% of average OCV.
     Tier 5 currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 0.70% of average TCV. As 
amended, a Member must have an ADV in Market Maker orders equal to or 
greater than 0.95% of average OCV.
     Tier 6 currently requires that a Member have an ADV in 
Market Maker orders equal to or greater than 1.10% of average TCV. As 
amended, a Member must have an ADV in Market Maker orders equal to or 
greater than 1.45% of average OCV.
     Tier 7 currently requires that a Member have an ADV in 
Customer orders equal to or greater than 0.05% of average TCV, and an 
ADV in Customer or Market Maker orders equal to or greater than 0.25% 
of average TCV. As amended, a Member must have an ADV in Customer 
orders equal to or greater than 0.05% of average OCV, and an ADV in 
Customer or Market Maker orders equal to or greater than 0.35% of 
average OCV.
Firm Penny Pilot Cross-Asset Tier
    Firm \14\ Penny Pilot \15\ orders yield fee code PF \16\ and are 
charged a standard fee of $0.45 per contract. Footnote 4 of the fee 
schedule sets forth a Cross-Asset Tier, providing a reduced fee of 
$0.32 per contract for Member's order that yield fee code PF where that 
Member has an ADV in Firm orders equal to or greater than 0.10% of 
average TCV and an ADAV \17\ on the Exchange's equity platform (``EDGX 
Equities'') equal to or greater than 0.12% of average TCV. As amended, 
a Member must have an ADV in Firm orders equal to or greater than 0.15% 
of average OCV, and on EDGX Equities an ADAV equal to or greater than 
0.12% of average TCV.
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    \14\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
    \15\ Id.
    \16\ Fee code PF is appended to a Members order which adds 
liquidity (Firm/BD/JBO), Penny Pilot.
    \17\ As defined in the Exchange's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
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Non-Substantive Change
    The header of each tier described on the Fee Schedule denotes three 
columns, the first of which is labeled as ``Tier'' in Footnotes 1 and 
2, and labeled as ``Description'' in Footnote 3 and footnote 4. To 
harmonize the labeling of the tiers and promote clarity throughout the 
fee schedule the Exchange proposes to label the first columns of 
Footnotes 3 and 4, ``Tier.''
Implementation Date
    The Exchange proposes to implement the amendments to its fee 
schedule immediately.\18\
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    \18\ The Exchange initially filed the proposed amendments to its 
fee schedule on September 30, 1016 (SR-BatsEDGX-2016-56). On October 
6, 2016, the Exchange withdrew SR-BatsEDGX-2016-56 and submitted 
this filing.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\19\ in general, and 
furthers the objectives of Section 6(b)(4),\20\ 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 Exchange believes that the proposed rates 
are equitable and non-discriminatory in that they apply uniformly to 
all Members.
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    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4).
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    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 described 
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 Exchange believes adopting a definition of OCV and utilizing 
OCV in lieu of TCV is reasonable, fair and equitable, and non-
discriminatory because the Exchange also proposed to modify the tier's 
related criteria in order to maintain substantially identical 
requirements to qualify for the tier without changing the rate provided 
for by the tiers. In addition, the amount of OCV historically tends to 
remain reasonably consistent from month to month, as opposed to TCV 
which is less consistent. OCV is also more consistent than options 
volume that clears in the Market Maker or Firm range at the OCC, as 
Market Maker and Firm volume may vary drastically from month to month 
based on market events, as opposed to Customer options volume which 
remains relatively consistent. Therefore, the Exchange believes 
utilizing OCV would result in consistent tier criteria as OCV is a 
relatively static monthly number which would enable market participants 
to better predict whether they may achieve a tier criteria each month 
and qualify for that tier's preferred pricing.
    The Exchange also believes that the use OCV provides a calculation 
that is reasonably identical to and is not a significant departure from 
previous tier qualifications conventions offered by

[[Page 72133]]

other exchanges \21\ The Exchange believes that the proposed 
definitions of OCV is reasonable, fair and equitable, and non-
discriminatory, and will provide additional transparency to Members 
regarding the calculations used to determine volume levels for purposes 
of the proposed tiered pricing model.
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    \21\ See the NYSE MKT LLC (``NYSE MKT'') fee schedule available 
at https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (setting forth tiers that 
provide preferred pricing to options market makers who meet certain 
criteria, including achieving a specific ``Monthly Volume as a % of 
Industry Customer Equity and Exchange Traded Fund (``ETF'') Option 
Volume''); NYSE Arca, Inc. (``NYSE ARCA'') options fee schedule 
available at https://www.nyse.com/publicdocs/nyse/markets/arca-
options/NYSE_Arca_Options_ Fee_Schedule.pdf (setting forth a Market 
Maker Incentive tier that provides preferred pricing to market 
makers who meet certain criteria, including achieving a specific 
percentage of ``Total Industry Customer equity and ETF option 
ADV''); Nasdaq Stock Market LLC (``Nasdaq'') options fee schedule 
available at http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (setting forth tiers that provide 
preferred pricing to market makers who meet certain criteria, 
including achieving a specific percentage of ``total industry 
customer equity and ETF option ADV contracts per month''); and 
Nasdaq BX LLC (``BX'') options fee schedule available at http://www.nasdaqtrader.com/Micro.aspx?id=BXOptionsPricing (setting forth 
tiers that provide preferred pricing to market makers who meet 
certain criteria, including achieving a specific percentage of 
``total industry customer equity and ETF option ADV contracts per 
month'').
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendment 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 
does not believe that the proposed changes represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. The Exchange believes that its 
proposal to amend the qualification criteria and to incorporate OCV as 
proposed would not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because the Exchange also proposed to modify the tier's related 
criteria in order to maintain substantially identical requirements to 
qualify for each tier. 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 
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 would not burden intramarket 
competition because the proposed rates would continue to apply 
uniformly to all Members. As stated above, 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 
structures to be unreasonable or excessive. The Exchange does not 
believe the proposed tiers and standard rates would burden intramarket 
competition as they would apply to all Members uniformly.

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 \22\ and paragraph (f) of Rule 19b-4 
thereunder.\23\ 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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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 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-BatsEDGX-2016-57 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-BatsEDGX-2016-57. 
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 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-
BatsEDGX-2016-57, and should be submitted on or before November 9, 
2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25236 Filed 10-18-16; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices 72131 Act 12 and the rules and regulations II. Self-Regulatory Organization’s TCV, the Exchange also proposes to thereunder. Statement of the Purpose of, and amend the percentage of OCV necessary It is therefore ordered, pursuant to Statutory Basis for, the Proposed Rule to achieve the tier so that it is Section 19(b)(2) of the Exchange Act,13 Change substantially identical to the previously that the proposed rule change (SR– required percentage of TCV. Doing so In its filing with the Commission, the OCC–2016–009) be, and it hereby is, will keep each tier’s criteria relatively Exchange included statements approved. unchanged from its current concerning the purpose of and basis for For the Commission, by the Division of the proposed rule change and discussed requirements. The rates for each tier are Trading and Markets, pursuant to delegated any comments it received on the unchanged. Changes to each tier are authority.14 described below. proposed rule change. The text of these Robert W. Errett, statements may be examined at the Customer Volume Tiers Deputy Secretary. places specified in Item IV below. The [FR Doc. 2016–25234 Filed 10–18–16; 8:45 am] Customer orders that yield fee codes Exchange has prepared summaries, set NC 7 or PC 8 and are given a standard BILLING CODE 8011–01–P forth in Sections A, B, and C below, of rebate of $0.05 per contract. Footnote 1 the most significant parts of such of the fee schedule sets forth five tiers, statements. SECURITIES AND EXCHANGE each providing enhanced rebates, COMMISSION A. Self-Regulatory Organization’s ranging from $0.10 to $0.25 per contract, Statement of the Purpose of, and to a Member’s order that yield fee codes [Release No. 34–79091; File No. SR– Statutory Basis for, the Proposed Rule NC or PC upon satisfying monthly BatsEDGX–2016–57] Change volume criteria based on an ADV 9 in Self-Regulatory Organizations; Bats Customer orders equal to or greater than 1. Purpose EDGX Exchange, Inc.; Notice of Filing a percentage of average TCV. and Immediate Effectiveness of a The Exchange proposes to amend its • Tier 1 currently requires that a Proposed Rule Change to Fees for Use fee schedule for its equity options Member have an ADV in Customer of Bats EDGX Exchange, Inc. Options platform (‘‘EDGX Options’’) to: (i) Add orders equal to or greater than 0.15% of Platform definition of OCC Customer Volume or average TCV. As amended, a Member OCV, to the Definitions section of the must have an ADV in Customer orders October 13, 2016. fee schedule; and (ii) modify the criteria equal to or greater than 0.20% of Pursuant to Section 19(b)(1) of the for the Customer Volume, Market Maker average OCV. Securities Exchange Act of 1934 (the Volume, and Firm Penny Pilot Cross- • Tier 2 currently requires that a ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Asset Tiers to reflect the new definition Member have an ADV in Customer notice is hereby given that on October of OCV; and (iii) to make a non- orders equal to or greater than 0.30% of 6, 2016, Bats EDGX Exchange, Inc. (the substantive change. average TCV. As amended, a Member ‘‘Exchange’’ or ‘‘EDGX’’) filed with the must have an ADV in Customer orders Securities and Exchange Commission OCC Customer Volume Definition equal to or greater than 0.40% of (the ‘‘Commission’’) the proposed rule The Exchange proposes to add the average OCV. change as described in Items I, II, and definition of ‘‘OCC Customer Volume’’ • Tier 3 currently requires that a III below, which Items have been or ‘‘OCV’’ to the definition section of its Member have an ADV in Customer prepared by the Exchange. The fee schedule. OCC Customer Volume or orders equal to or greater than 0.50% of Commission is publishing this notice to OCV will be defined as the total equity average TCV. As amended, a Member solicit comments on the proposed rule and Exchange Traded Fund (‘‘ETF’’) must have an ADV in Customer orders change from interested persons. options volume that clears in the equal to or greater than 0.65% of Customer 4 range at the Options Clearing average OCV. I. Self-Regulatory Organization’s Statement of the Terms of the Substance Corporation (‘‘OCC’’) for the month for • Tier 4 currently requires that a of the Proposed Rule Change which the fees apply, excluding volume Member has an ADV in Customer orders on any day that the Exchange equal to or greater than 0.80% of The Exchange filed a proposal to experiences an Exchange System average TCV. As amended, a Member amend the fee schedule applicable to Disruption 5 and on any day with a must have an ADV in Customer orders Members 3 and non-Members of the scheduled early market close. equal to or greater than 1.05% of Exchange pursuant to EDGX Rules average OCV. Tier Qualifications Change 15.1(a) and (c). • Tier 5 currently requires that a The text of the proposed rule change The Exchange proposes to replace Member have an ADV in Customer is available at the Exchange’s Web site current tier qualifications which refer to orders equal to or greater than 0.05% of at www.batstrading.com, at the Total Consolidated Volume (‘‘TCV’’) 6 average TCV, and an ADV in Customer principal office of the Exchange, and at with a reference to OCV in the Customer or Market Maker 10 orders equal to or the Commission’s Public Reference Volume Tier, Market Maker Volume greater than 0.25% of average TCV. As Room. Tier and Firm Penny Pilot Cross-Asset amended, a Member must have an ADV Tier, in Footnotes 1, 2 and 4, in Customer orders equal to or greater 12 In approving this proposed rule change, the Commission has considered the proposed rule’s respectively. Because OCV generally than 0.05% of average OCV, and an impact on efficiency, competition, and capital makes up a smaller range than the prior sradovich on DSK3GMQ082PROD with NOTICES formation. See 15 U.S.C. 78c(f). 7 Fee code NC is appended to a Member’s order 13 15 U.S.C. 78s(b)(2). 4 As defined in the Exchange’s fee schedule which removes liquidity (Customer), Non-Penny. 14 17 CFR 200.30–3(a)(12). available at http://www.batsoptions.com/support/ Id. 1 15 U.S.C. 78s(b)(1). fee_schedule/edgx/. 8 Fee code PC is appended to a Member’s order 2 17 CFR 240.19b–4. 5 An ‘‘Exchange System Disruption’’ means ‘‘any which removes liquidity (Customer) Penny Pilot. Id. 3 The term ‘‘Member’’ is defined as ‘‘any day that the Exchange’s system experiences a 9 As defined in the Exchange’s fee schedule registered broker or dealer that has been admitted disruption that lasts for more than 60 minutes available at http://www.batsoptions.com/support/ to membership in the Exchange.’’ See Exchange during Regular Trading Hours.’’ Id. fee_schedule/edgx/. Rule 1.5(n). 6 Id. 10 Id. VerDate Sep<11>2014 17:39 Oct 18, 2016 Jkt 241001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM 19OCN1

72132 Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices ADV in Customer or Market Maker • Tier 7 currently requires that a designed to provide for the equitable orders equal to or greater than 0.35% of Member have an ADV in Customer allocation of reasonable dues, fees and average OCV. orders equal to or greater than 0.05% of other charges among its Members and average TCV, and an ADV in Customer other persons using its facilities. The Market Marker Volume Tier or Market Maker orders equal to or Exchange also notes that it operates in Market Maker orders yield fee codes greater than 0.25% of average TCV. As a highly-competitive market in which PM 11 or NM 12 and are charged a amended, a Member must have an ADV market participants can readily direct standard fee of $0.19 per contract. in Customer orders equal to or greater order flow to competing venues if they Footnote 2 of the fee schedule sets forth than 0.05% of average OCV, and an deem fee levels at a particular venue to seven tiers, each providing a reduced ADV in Customer or Market Maker be excessive. The Exchange believes fee ranging from $0.01 to $0.16 per orders equal to or greater than 0.35% of that the proposed rates are equitable and contract to a Member’s order that yield average OCV. non-discriminatory in that they apply fee code PM or NM upon satisfying uniformly to all Members. Firm Penny Pilot Cross-Asset Tier The proposed fee structure remains monthly volume criteria based on a Member having an ADV in Market Firm 14 Penny Pilot 15 orders yield fee intended to attract order flow to the Maker orders equal to or greater than a code PF 16 and are charged a standard Exchange by offering market percentage of average TCV. fee of $0.45 per contract. Footnote 4 of participants a competitive pricing • Tier 1 currently requires that a the fee schedule sets forth a Cross-Asset structure. The Exchange believes it is Member have an ADV in Market Maker Tier, providing a reduced fee of $0.32 reasonable to offer and incrementally orders equal to or greater than 0.05% of per contract for Member’s order that modify incentives intended to help to average TCV. As amended, a Member yield fee code PF where that Member contribute to the growth of the must have an ADV in Market Maker has an ADV in Firm orders equal to or Exchange. Volume-based rebates such as orders equal to or greater than 0.05% of greater than 0.10% of average TCV and that described herein have been widely average OCV.13 an ADAV 17 on the Exchange’s equity adopted by exchanges, including the platform (‘‘EDGX Equities’’) equal to or Exchange, and are equitable because • Tier 2 currently requires that a greater than 0.12% of average TCV. As they are open to all Members on an Member have an ADV in Market Maker amended, a Member must have an ADV equal basis and provide additional orders equal to or greater than 0.10% of in Firm orders equal to or greater than benefits or discounts that are reasonably average TCV. The equivalent proposed 0.15% of average OCV, and on EDGX related to: (i) The value to an exchange’s calculation would require that a Equities an ADAV equal to or greater market quality; (ii) associated higher Member has an ADV in Market Maker than 0.12% of average TCV. levels of market activity, such as higher orders equal to or greater than 0.15% of Non-Substantive Change levels of liquidity provisions and/or average OCV. growth patterns; and (iii) introduction of • Tier 3 Currently requires that a The header of each tier described on higher volumes of orders into the price Member have an ADV in Market Maker the Fee Schedule denotes three and volume discovery processes. orders equal to or greater than 0.20% of columns, the first of which is labeled as The Exchange believes adopting a average TCV. As amended, a Member ‘‘Tier’’ in Footnotes 1 and 2, and labeled definition of OCV and utilizing OCV in must have an ADV in Market Maker as ‘‘Description’’ in Footnote 3 and lieu of TCV is reasonable, fair and orders equal to or greater than 0.25% of footnote 4. To harmonize the labeling of equitable, and non-discriminatory average OCV. the tiers and promote clarity throughout because the Exchange also proposed to • Tier 4 currently requires that a the fee schedule the Exchange proposes modify the tier’s related criteria in order Member have an ADV in Market Maker to label the first columns of Footnotes to maintain substantially identical orders equal to or greater than 0.30% of 3 and 4, ‘‘Tier.’’ requirements to qualify for the tier average TCV. As amended, a Member without changing the rate provided for Implementation Date must have an ADV in Market Maker by the tiers. In addition, the amount of orders equal to or greater than 0.40% of The Exchange proposes to implement OCV historically tends to remain average OCV. the amendments to its fee schedule reasonably consistent from month to • Tier 5 currently requires that a immediately.18 month, as opposed to TCV which is less Member have an ADV in Market Maker 2. Statutory Basis consistent. OCV is also more consistent orders equal to or greater than 0.70% of than options volume that clears in the average TCV. As amended, a Member The Exchange believes that the proposed rule change is consistent with Market Maker or Firm range at the OCC, must have an ADV in Market Maker as Market Maker and Firm volume may orders equal to or greater than 0.95% of the objectives of Section 6 of the Act,19 in general, and furthers the objectives of vary drastically from month to month average OCV. based on market events, as opposed to Section 6(b)(4),20 in particular, as it is • Tier 6 currently requires that a Customer options volume which Member have an ADV in Market Maker 14 As defined in the Exchange’s fee schedule remains relatively consistent. Therefore, orders equal to or greater than 1.10% of available at http://www.batsoptions.com/support/ the Exchange believes utilizing OCV average TCV. As amended, a Member fee_schedule/edgx/. would result in consistent tier criteria as must have an ADV in Market Maker 15 Id. OCV is a relatively static monthly 16 Fee code PF is appended to a Members order orders equal to or greater than 1.45% of number which would enable market which adds liquidity (Firm/BD/JBO), Penny Pilot. average OCV. 17 As defined in the Exchange’s fee schedule participants to better predict whether sradovich on DSK3GMQ082PROD with NOTICES available at http://www.batsoptions.com/support/ they may achieve a tier criteria each 11 Fee code PM is appended to a Members order fee_schedule/edgx/. month and qualify for that tier’s which adds liquidity (MM), Penny Pilot. Id. 18 The Exchange initially filed the proposed preferred pricing. 12 Fee code NM is appended to a Members order amendments to its fee schedule on September 30, The Exchange also believes that the which adds liquidity (MM), Non-Penny. Id. 1016 (SR–BatsEDGX–2016–56). On October 6, 2016, 13 The Exchange proposes to retain the 0.05% the Exchange withdrew SR–BatsEDGX–2016–56 use OCV provides a calculation that is requirement as adjusting that number to reflect and submitted this filing. reasonably identical to and is not a replacing TCV with OCV will result in a de 19 15 U.S.C. 78f. significant departure from previous tier minimmis change in the percentage. 20 15 U.S.C. 78f(b)(4). qualifications conventions offered by VerDate Sep<11>2014 17:39 Oct 18, 2016 Jkt 241001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM 19OCN1

Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices 72133 other exchanges 21 The Exchange believes that its proposal would not file number should be included on the believes that the proposed definitions of burden intramarket competition because subject line if email is used. To help the OCV is reasonable, fair and equitable, the proposed rates would continue to Commission process and review your and non-discriminatory, and will apply uniformly to all Members. As comments more efficiently, please use provide additional transparency to stated above, the Exchange notes that it only one method. The Commission will Members regarding the calculations operates in a highly competitive market post all comments on the Commission’s used to determine volume levels for in which market participants can Internet Web site (http://www.sec.gov/ purposes of the proposed tiered pricing readily direct order flow to competing rules/sro.shtml). Copies of the model. venues if they deem fee structures to be submission, all subsequent unreasonable or excessive. The amendments, all written statements B. Self-Regulatory Organization’s Exchange does not believe the proposed with respect to the proposed rule Statement on Burden on Competition tiers and standard rates would burden change that are filed with the The Exchange does not believe its intramarket competition as they would Commission, and all written proposed amendment to its fee schedule apply to all Members uniformly. communications relating to the would impose any burden on proposed rule change between the competition that is not necessary or C. Self-Regulatory Organization’s Commission and any person, other than appropriate in furtherance of the Statement on Comments on the those that may be withheld from the purposes of the Act. The Exchange does Proposed Rule Change Received From public in accordance with the not believe that the proposed changes Members, Participants, or Others provisions of 5 U.S.C. 552, will be represents a significant departure from The Exchange has not solicited, and available for Web site viewing and previous pricing offered by the does not intend to solicit, comments on printing in the Commission’s Public Exchange or pricing offered by the this proposed rule change. The Reference Room, 100 F Street NE., Exchange’s competitors. The Exchange Exchange has not received any written Washington, DC 20549 on official believes that its proposal to amend the comments from members or other business days between the hours of qualification criteria and to incorporate interested parties. 10:00 a.m. and 3:00 p.m. Copies of such OCV as proposed would not impose any filing also will be available for III. Date of Effectiveness of the burden on competition that is not inspection and copying at the principal Proposed Rule Change and Timing for necessary or appropriate in furtherance office of the Exchange. All comments Commission Action of the purposes of the Act because the received will be posted without change; Exchange also proposed to modify the The foregoing rule change has become the Commission does not edit personal tier’s related criteria in order to effective pursuant to Section 19(b)(3)(A) identifying information from maintain substantially identical of the Act 22 and paragraph (f) of Rule submissions. You should submit only requirements to qualify for each tier. 19b–4 thereunder.23 At any time within information that you wish to make Additionally, Members may opt to 60 days of the filing of the proposed rule available publicly. All submissions disfavor the Exchange’s pricing if they change, the Commission summarily may should refer to File Number SR– believe that alternatives offer them temporarily suspend such rule change if BatsEDGX–2016–57, and should be better value. Accordingly, the Exchange it appears to the Commission that such submitted on or before November 9, does not believe that the proposed action is necessary or appropriate in the 2016. changes will impair the ability of public interest, for the protection of investors, or otherwise in furtherance of For the Commission, by the Division of Members or competing venues to Trading and Markets, pursuant to delegated maintain their competitive standing in the purposes of the Act. authority.24 the financial markets. The Exchange IV. Solicitation of Comments Robert W. Errett, 21 See the NYSE MKT LLC (‘‘NYSE MKT’’) fee Interested persons are invited to Deputy Secretary. schedule available at https://www.nyse.com/ submit written data, views, and [FR Doc. 2016–25236 Filed 10–18–16; 8:45 am] publicdocs/nyse/markets/amex-options/ arguments concerning the foregoing, BILLING CODE 8011–01–P NYSE_Amex_Options_Fee_ including whether the proposed rule Schedule.pdf (setting forth tiers that provide preferred pricing to options market makers who change is consistent with the Act. meet certain criteria, including achieving a specific Comments may be submitted by any of SECURITIES AND EXCHANGE ‘‘Monthly Volume as a % of Industry Customer the following methods: COMMISSION Equity and Exchange Traded Fund (‘‘ETF’’) Option Volume’’); NYSE Arca, Inc. (‘‘NYSE ARCA’’) Electronic Comments [Release No. 34–79089; File No. SR– options fee schedule available at https:// NYSEMKT–2016–91] www.nyse.com/publicdocs/nyse/markets/arca- • Use the Commission’s Internet options/NYSE_Arca_Options_Fee_Schedule.pdf comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE (setting forth a Market Maker Incentive tier that rules/sro.shtml); or MKT LLC; Notice of Filing and provides preferred pricing to market makers who • Send an email to rule- Immediate Effectiveness of Proposed meet certain criteria, including achieving a specific comments@sec.gov. Please include File percentage of ‘‘Total Industry Customer equity and Change To Modify the NYSE Amex ETF option ADV’’); Nasdaq Stock Market LLC Number SR–BatsEDGX–2016–57 on the Options Fee Schedule (‘‘Nasdaq’’) options fee schedule available at http:// subject line. www.nasdaqtrader.com/Micro.aspx?id=options October 13, 2016. Pricing (setting forth tiers that provide preferred Paper Comments Pursuant to Section 19(b)(1) 1 of the pricing to market makers who meet certain criteria, • Send paper comments in triplicate Securities Exchange Act of 1934 (the including achieving a specific percentage of ‘‘total sradovich on DSK3GMQ082PROD with NOTICES industry customer equity and ETF option ADV to Secretary, Securities and Exchange ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 contracts per month’’); and Nasdaq BX LLC (‘‘BX’’) Commission, 100 F Street NE., notice is hereby given that, on October options fee schedule available at http:// Washington, DC 20549–1090. 3, 2016, NYSE MKT LLC (the www.nasdaqtrader.com/Micro.aspx?id=BXOptions All submissions should refer to File Pricing (setting forth tiers that provide preferred pricing to market makers who meet certain criteria, Number SR–BatsEDGX–2016–57. This 24 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). including achieving a specific percentage of ‘‘total 22 15 U.S.C. 78s(b)(3)(A). 2 15 U.S.C. 78a. industry customer equity and ETF option ADV contracts per month’’). 23 17 CFR 240.19b–4(f). 3 17 CFR 240.19b–4. VerDate Sep<11>2014 17:39 Oct 18, 2016 Jkt 241001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM 19OCN1


Document Created: 2016-10-19 02:11:42
Document Modified: 2016-10-19 02:11:42
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 72131 
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