81 FR 81828 - 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.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 223 (November 18, 2016)

[Federal Register Volume 81, Number 223 (Friday, November 18, 2016)]
[Notices]
[Pages 81828-81830]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-27744]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79306; File No. SR-BatsEDGX-2016-63]


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.

November 14, 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 
(``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 EDGA 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Fee Code Z
    The Exchange proposes to increase the fee for orders yielding fee 
code Z, which is yielded on orders routed to a non-exchange destination 
using ROUZ \6\ routing strategy, from $0.00100 to $0.00120 per share 
for securities priced at or above $1.00. The Exchange does not propose 
to amend the rate for orders yielding fee code Z in securities priced 
below $1.00.
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    \6\ See Exchange Rule 11.11(g)(3).
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Fee Code O
    The Exchange also proposes to amend footnote 5 of its Fee Schedule 
to increase the fee cap for orders yielding fee code O from $20,000 to 
$35,000 per month per Member. Fee code O is appended to orders that are 
touted to participate in the listing market's opening or re-opening 
cross and are charged a fee of $0.00100 per share for orders in 
securities priced at or above $1.00 and 0.30% of the transaction dollar 
value for securities priced below $1.00. When the Exchange routes to a 
listing exchange's opening cross, such as the Nasdaq Stock Market LLC 
(``Nasdaq''), the Exchange passes through the tier saving that Bats 
Trading, Inc. (``Bats Trading''), the Exchange's routing broker-dealer, 
achieves on an away exchange to its Members. This tier savings takes 
the form of a cap of Member's fees at $20,000 per month for using fee 
code O. The proposed increase in the fee cap under footnote 5 is in 
response to the September 2016 fee cap change by Nasdaq for orders that 
participate in their opening cross processes.\7\ Nasdaq's September 
2016 fee cap increase requires that members add, at a minimum, one 
million shares of liquidity to Nasdaq, on average per day, during the 
month to be eligible for its existing fee cap of $35,000 for orders 
that participate in the opening cross. When Bats Trading routes to 
Nasdaq's opening cross, it will now be subject to the increase fee cap 
and new tier requirement. The proposed increase to the fee cap under 
footnote 5 would enable the Exchange to equitably allocate its costs 
among all Members utilizing fee code O. Therefore, the Exchange 
proposes to amend footnote 5 to increase the fee cap for orders 
yielding fee code O from $20,000 to $35,000 per month per Member in 
response to Nasdaq's September 2016 increased fee cap and related 
requirements.
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    \7\ See Securities Exchange Act Release No. 78977 (September 29, 
2016), 81 FR 691140 [sic] (October 5, 2016) (SR-Nasdaq-2016-132) 
(increasing the fee cap for orders executed in its opening cross 
from $30,000 to $35,000).
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Implementation Date
    The Exchange proposes to implement this amendment to its Fee 
Schedule November 1, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 81829]]

the objectives of Section 6 of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(4),\9\ 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.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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Fee Code Z
    The Exchange believes that its proposal to increase the fee for 
orders routed to a non-exchange destination that yield fee code Z 
represents an equitable allocation of reasonable dues, fees, and other 
charges among Members and other person using its facilities in that 
they are designed in part to cover the costs of routing. While Members 
that route to a non-exchange destination using ROUZ routing strategy 
will be paying higher fees due to the proposal, the increased revenue 
received by the Exchange will be used to fund the Exchange generally, 
including the cost of maintaining and improving the technology used to 
handle and route orders from the Exchange as well as programs that the 
Exchange believes help to attract additional liquidity and thus improve 
the depth of liquidity available on the Exchange. Accordingly, although 
the cost of routing is increasing, the Exchange believes that the 
increase is a modest increase and that higher routing fees will benefit 
Members in other ways. Furthermore, the Exchange notes that routing 
through the Exchange is voluntary. Lastly the Exchange also believes 
that the proposed amendment is non-discriminatory because it applies 
uniformly to all Members.
Fee Code O
    The Exchange believes that its proposal to amend footnote 5 to 
increase the fee cap for orders yielding fee code O from $20,000 to 
$35,000 per month per Member represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities. The proposed increase in the fee cap 
under footnote 5 is in response to September 2016 fee cap increase by 
Nasdaq for orders that participate in their opening cross process. 
Prior to Nasdaq's September 2016 fee cap increase, Nasdaq capped Bats 
Trading monthly fees for participating in it's opening cross at 
$30,000. Nasdaq capped Bats Trading monthly fees for participating in 
its opining cross at $30,000. Nasdaq has now increased that cap to 
$35,000.\10\ The proposed increase to the fee cap under footnote 5 
would enable the Exchange to equitably allocate its costs among all 
Member who utilize fee code O. Therefore, the Exchange believes that 
the proposed change to footnote 5 is equitable and reasonable because 
it accounts for the increased Nasdaq fee cap, which enables the 
Exchange to apply to its Member similar fee caps. The Exchange notes 
that routing though Bats Trading is voluntary and believes that the 
proposed change is non-discriminatory because it applies uniformly to 
all Members.
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    \10\ See supra note 7.
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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. 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 
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 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 \11\ and paragraph (f) of Rule 19b-4 
thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2016-63 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-2016-63. 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 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-2016-63, and should 
be submitted on or before December 9, 2016.


[[Page 81830]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-27744 Filed 11-17-16; 8:45 am]
 BILLING CODE 8011-01-P