81 FR 80705 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of the Exchange's Equity Options Platform

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 221 (November 16, 2016)

Page Range		80705-80706
FR Document		2016-27468

Federal Register, Volume 81 Issue 221 (Wednesday, November 16, 2016)

[Federal Register Volume 81, Number 221 (Wednesday, November 16, 2016)]
[Notices]
[Pages 80705-80706]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-27468]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79273; File No. SR-BatsEDGX-2016-62]

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

November 9, 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 November 1, 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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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 to specify in new
footnote 5 that when Customer \4\ orders are submitted with a
Designated Give Up, as defined below, the applicable rebates for such
orders when executed on the Exchange (yielding fee code NC or PC) \5\
are provided to the Member who routed the order to the Exchange.
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\4\ As defined in the Exchange's fee schedule available at
http://www.bats.com/us/options/membership/fee_schedule/edgx/.
\5\ Fee codes NC and PC are appended to Customer orders in Non-
Penny Pilot and Penny Pilot Securities, respectively. Id.
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The Exchange recently amended Rule 21.12 (Clearing Member Give Up)
to expand upon the procedure related to the ``give up'' of a Clearing
Member \6\ by Users \7\ on the Exchange.\8\ As amended, Rule 21.12
provides that, in addition to its own Clearing Member (or itself, if
the firm is self-clearing), a User may identify to the Exchange a
Designated Give Up, as that term is defined in the Rule. Specifically,
amended Rule 21.12(b)(1) defines the term Designated Give Up as any
Clearing Member that a User (other than a Market Maker \9\) identifies
to the Exchange, in writing, as a Clearing Member the User requests the
ability to give up. With this change, a Member acting as an options
routing firm on behalf of one or more other Exchange Members (a
``Routing Firm'') is able to route orders to the Exchange and to
immediately give up the party (a party other than the Routing Firm
itself or the Routing Firm's own clearing firm) who will accept and
clear any resulting transaction. Because the Routing Firm is
responsible for the decision to route the order to the Exchange, the
Exchange believes that such Member should be provided the rebate when
orders that yield fee code NC or PC are executed. In connection with
this change, the Exchange proposes to append new footnote 5 to fee
codes NC and PC in the Fee Codes and Associated Fees table of the fee
schedule.
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\6\ A Clearing Member is defined as ``an Options Member that is
self-clearing or an Options Member that clears EDGX Options
Transactions for other Members of EDGX Options.'' See Exchange Rule
16.1(a)(15). An Option Member is defined as ``a firm, or
organization that is registered with the Exchange pursuant to
Chapter XVII of these Rules for purposes of participating in options
trading on EDGX Options as an `Options Order Entry Firm' or `Options
Market Maker.''' See Exchange Rule 16.1(a)(38).
\7\ A User is defined as ``any Options Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3 (Access).'' See Exchange Rule 16.1(a)(63).
\8\ See Securities Exchange Act Release No. 79184 (October 28,
2016) (SR-BatsEDGX-2016-58).
\9\ For purposes of this filing, Market Maker refers to Members
acting in the capacity of Market Maker and includes all Exchange
Market Maker capacities e.g., Primary Market Makers.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6 of the Act.\10\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\11\ in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and other persons using any facility or system which the
Exchange operates or controls.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange notes that the U.S. options markets are highly
competitive, and the proposed fee structure is intended to provide an
incentive for Members utilizing the Exchange's new give up procedure to
direct orders to the Exchange. The proposal would only apply to fee
codes NC and PC, related to Customer orders, because these are the
primary rebates in place on the Exchange \12\ and reflect the primary
liquidity that the Exchange is seeking to attract from Routing Firms
that are likely to utilize the give up procedure.
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\12\ The Exchange notes that Market Maker orders yielding fee
codes NM and PM do indeed receive rebates to the extent a Member
qualifies for Market Maker Volume Tier 6 pursuant to footnote 2 of
the fee schedule. The Exchange, however, again notes that Market
Makers are expressly excluded from utilizing the give up procedure.
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The Exchange believes that the proposed amendments to its fee

[[Page 80706]]

schedule will enhance the Exchange's competitive position and will
result in increased liquidity on the Exchange, to the benefit of all
Exchange participants. Therefore, the Exchange believes that providing
rebates is equitable and reasonable and not unfairly discriminatory as
it would allow the Exchange, in the context of the new give up
procedure described above, to provide a rebate directly to the party
making the routing decision to direct Customer orders to the Exchange
(i.e., the Routing Firm), which is consistent with both the Exchange's
historic practice and the purpose behind a rebate (i.e., to incentivize
the order being directed to the Exchange).

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

The Exchange believes its proposed amendments 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 its
competitors. Additionally, Members may opt to disfavor the Exchange's
pricing if they believe that alternatives offer them better value. The
Exchange believes that its proposal to incentivize Routing Firms that
are utilizing the new give up procedure to direct Customer orders to
the Exchange, and will enhance the Exchange's competitive position by
resulting in increased liquidity on the Exchange, thereby providing
more of an opportunity for customers to receive best executions.

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 \13\ and paragraph (f) of Rule 19b-4
thereunder.\14\ 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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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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 rule-comments@sec.gov. Please include
File Number SR-BatsEDGX-2016-62 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-2016-62. 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-2016-62, and should
be submitted on or before December 7, 2016.
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\15\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Brent J. Fields,
Secretary.
[FR Doc. 2016-27468 Filed 11-15-16; 8:45 am]
BILLING CODE 8011-01-P

80706 Federal Register / Vol. 81, No. 221 / Wednesday, November 16, 2016 / Notices

schedule will enhance the Exchange’s action is necessary or appropriate in the For the Commission, by the Division of
competitive position and will result in public interest, for the protection of Trading and Markets, pursuant to delegated
increased liquidity on the Exchange, to investors, or otherwise in furtherance of authority.15
the benefit of all Exchange participants. the purposes of the Act. Brent J. Fields,
Therefore, the Exchange believes that Secretary.
IV. Solicitation of Comments
providing rebates is equitable and [FR Doc. 2016–27468 Filed 11–15–16; 8:45 am]
reasonable and not unfairly Interested persons are invited to BILLING CODE 8011–01–P
discriminatory as it would allow the submit written data, views, and
Exchange, in the context of the new give arguments concerning the foregoing,
up procedure described above, to including whether the proposed rule SECURITIES AND EXCHANGE
provide a rebate directly to the party change is consistent with the Act. COMMISSION
making the routing decision to direct Comments may be submitted by any of
Customer orders to the Exchange (i.e., the following methods: Sunshine Act Meeting
the Routing Firm), which is consistent Electronic Comments Notice is hereby given, pursuant to
with both the Exchange’s historic
practice and the purpose behind a • Use the Commission’s Internet the provisions of the Government in the
comment form (http://www.sec.gov/ Sunshine Act, Public Law 94–409, that
rebate (i.e., to incentivize the order the Securities and Exchange
rules/sro.shtml); or
being directed to the Exchange).
• Send an email to rule-comments@ Commission will hold a closed meeting
B. Self-Regulatory Organization’s sec.gov. Please include File Number SR– on Wednesday, November 16, 2016 at 1
Statement on Burden on Competition BatsEDGX–2016–62 on the subject line. p.m.
Commissioners, Counsel to the
The Exchange believes its proposed Paper Comments Commissioners, the Secretary to the
amendments to its fee schedule would • Send paper comments in triplicate Commission, and recording secretaries
not impose any burden on competition to Secretary, Securities and Exchange will attend the closed meeting. Certain
that is not necessary or appropriate in Commission, 100 F Street NE., staff members who have an interest in
furtherance of the purposes of the Act. Washington, DC 20549–1090. the matters also may be present.
The Exchange does not believe that the The General Counsel of the
All submissions should refer to File
proposed change represents a significant Commission, or her designee, has
Number SR–BatsEDGX–2016–62. This
departure from previous pricing offered certified that, in her opinion, one or
file number should be included on the
by the Exchange or its competitors. more of the exemptions set forth in 5
subject line if email is used. To help the
Additionally, Members may opt to U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
Commission process and review your
disfavor the Exchange’s pricing if they and 17 CFR 200.402(a)(3), (a)(5), (a)(7),
comments more efficiently, please use
believe that alternatives offer them (a)(9)(ii) and (a)(10), permit
only one method. The Commission will
better value. The Exchange believes that consideration of the scheduled matter at
post all comments on the Commission’s
its proposal to incentivize Routing the closed meeting.
Internet Web site (http://www.sec.gov/
Firms that are utilizing the new give up Commissioner Piwowar, as duty
rules/sro.shtml). Copies of the
procedure to direct Customer orders to officer, voted to consider the items
submission, all subsequent
the Exchange, and will enhance the listed for the closed meeting in closed
amendments, all written statements
Exchange’s competitive position by session, and determined that no earlier
with respect to the proposed rule
resulting in increased liquidity on the notice thereof was possible.
change that are filed with the
Exchange, thereby providing more of an The subject matter of the closed
Commission, and all written
opportunity for customers to receive meeting will be:
communications relating to the Institution and settlement of
best executions.
proposed rule change between the injunctive actions;
C. Self-Regulatory Organization’s Commission and any person, other than Institution and settlement of
Statement on Comments on the those that may be withheld from the administrative proceedings; and
Proposed Rule Change Received From public in accordance with the Other matters relating to enforcement
Members, Participants, or Others provisions of 5 U.S.C. 552, will be proceedings.
The Exchange has not solicited, and available for Web site viewing and At times, changes in Commission
does not intend to solicit, comments on printing in the Commission’s Public priorities require alterations in the
this proposed rule change. The Reference Room, 100 F Street NE., scheduling of meeting items.
Exchange has not received any written Washington, DC 20549 on official For further information and to
comments from members or other business days between the hours of ascertain what, if any, matters have been
interested parties. 10:00 a.m. and 3:00 p.m. Copies of such added, deleted or postponed; please
filing also will be available for contact Brent J. Fields from the Office of
III. Date of Effectiveness of the inspection and copying at the principal the Secretary at (202) 551–5400.
Proposed Rule Change and Timing for office of the Exchange. All comments Dated: November 10, 2016.
Commission Action received will be posted without change; Brent J. Fields,
The foregoing rule change has become the Commission does not edit personal
Secretary.
effective pursuant to Section 19(b)(3)(A) identifying information from
[FR Doc. 2016–27630 Filed 11–14–16; 11:15 am]
submissions. You should submit only
asabaliauskas on DSK3SPTVN1PROD with NOTICES

of the Act 13 and paragraph (f) of Rule
BILLING CODE 8011–01–P
19b–4 thereunder.14 At any time within information that you wish to make
60 days of the filing of the proposed rule available publicly. All submissions
change, the Commission summarily may should refer to File Number SR-
Securities and Exchange Commission
temporarily suspend such rule change if BatsEDGX–2016–62, and should be
it appears to the Commission that such submitted on or before December 7, Sunshine Act Meeting
2016.
13 15 U.S.C. 78s(b)(3)(A). Notice is hereby given, pursuant to
14 17 CFR 240.19b–4(f). 15 17 CFR 200.30–3(a)(12). the provisions of the Government in the

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Document Created: 2016-11-16 00:57:37
Document Modified: 2016-11-16 00:57:37

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 80705