81 FR 90015 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange's Equity Options Platform
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 239 (December 13, 2016)
Federal Register Volume 81, Issue 239 (December 13, 2016)
| Page Range | 90015-90019 | |
| FR Document | 2016-29801 |
[Federal Register Volume 81, Number 239 (Tuesday, December 13, 2016)] [Notices] [Pages 90015-90019] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-29801] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79496; File No. SR-BatsBZX-2016-83] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange's Equity Options Platform December 7, 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 30, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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 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 [[Page 90016]] Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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). --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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 reduce the rebates for: (i) Fee code NF, which is appended to Firm,\6\ Broker Dealer,\7\ and Joint Back Office,\8\ orders in Non-Penny Pilot Securities; \9\ (ii) the Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tier 2 under footnote 8; (iii) fee code NN, which is appended to Away Market Maker \10\ orders which add liquidity in Non-Penny Pilot Securities; and (iv) the Away Market Maker Non-Penny Pilot Add Volume Tier 1 under footnote 11. Additionally, the Exchange proposes to modify the required criteria for the: (i) NBBO Setter Tier 5 under footnote 4; and (ii) Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tier 3 under footnote 8 and increase the tier's rebate. Lastly, the Exchange proposes to modify the fee codes that may qualify for the additional rebates provided by the NBBO Setter Tiers 1 through 4 under footnote 4. --------------------------------------------------------------------------- \6\ The term ``Firm'' applies to any transaction identified by a Member for clearing in the Firm range at the OCC, excluding any Joint Back Office transaction. \7\ The term ``Broker Dealer'' applies to any order for the account of a broker dealer, including a foreign broker dealer that clears in the Customer range at the OCC. \8\ The term ``Joint Back Office'' applies to any transaction identified by a Member for clearing in the Firm range at the OCC that is identified with an origin code as Joint Back Office. A Joint Back Office participant is a Member that maintains a Joint Back Office arrangement with a clearing broker-dealer. \9\ The term ``Non-Penny Pilot Security'' applies to those issues that are quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. \10\ The term ``Away Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is not registered with the Exchange as a Market Maker, but is registered as a market maker on another options exchange. --------------------------------------------------------------------------- Fee Code NF The Exchange proposes to reduce the rebate for fee code NF, under which a Member currently receives a rebate of $0.36 per contract for its Firm, Broker Dealer, and Joint Back Office orders in Non-Penny Pilot Securities that add liquidity. The Exchange proposes to reduce the rebate for fee code NF from $0.36 per contract to $0.30 per contract. The Exchange also proposes to update the Standard Rates table of the fee schedule to reflect the new rebate. Fee Code NN The Exchange proposes to reduce the rebate for fee code NN, under which a Member currently receives a rebate of $0.36 per contract for its Away Market Maker orders in Non-Penny Pilot Securities that add liquidity. The Exchange proposes to reduce the rebate for fee code NN from $0.36 per contract to $0.30 per contract. The Exchange also proposes to update the Standard Rates table to reflect the new rebate. Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tiers Firm, Broker Dealer, and Joint Back Office orders that add liquidity on the Exchange in Non-Penny Pilot Securities yield fee code NF and currently receive a standard rebate of $0.36 per contract.\11\ In addition, footnote 8 of the fee schedule currently sets forth three different tiers, each providing an enhanced rebate ranging from $0.45 to $0.67 per contract to an order that yields fee code NF upon satisfying the monthly volume criteria required by the respective tier. --------------------------------------------------------------------------- \11\ The Exchange proposes in this filing to reduce this rebate to $0.30 per contact as of December 1, 2016. --------------------------------------------------------------------------- To qualify for tier 2 and receive a rebate of $0.65 per contract, the Exchange requires a Member has an ADV \12\ equal to or greater than 0.25% of average TCV.\13\ The Exchange proposes to reduce the rebate provided in tier 2 from $0.65 per contract to $0.60 per contract. The Exchange also proposes to update the Standard Rate table to reflect the new rebate. The Exchange does not propose to amend tier 2's required criteria. --------------------------------------------------------------------------- \12\ 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. \13\ 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, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close --------------------------------------------------------------------------- The Exchange proposes to increase the rebate and amend the required criteria for tier 3. To qualify for tier 3 and receive a rebate of $0.67 per contract, the Exchange currently requires a Member to: (1) Have an ADV equal to or greater than 0.40% of average TCV; and (2) have an ADAV \14\ in Away Market Maker, Firm, Broker Dealer, and Joint Back Office orders equal to or greater than 0.30% of average TCV. The Exchange proposes to increase the first prong of the tier's criteria to require a Member to have an ADV in equal to or greater than 1.75% of average TCV. In addition, the Exchange proposes to increase the second prong of the tier's criteria to require that a Member also have an ADAV in Away Market Maker, Firm, Broker Dealer, and Joint Back Office orders equal to or greater than 1.25% of average TCV. To reflect the proposed heightened criteria necessary to achieve tier 3, the Exchange proposes to increase the tier's rebate from $0.67 per contract to $0.69 per contract. The Exchange also proposes to update the Standard Rate table to reflect the new rebate. --------------------------------------------------------------------------- \14\ As set forth in the Exchange's fee schedule, ``ADAV'' means average daily volume calculated as the number of contracts added per day. --------------------------------------------------------------------------- Away Market Maker Non-Penny Pilot Add Volume Tiers Away Market Maker orders that add liquidity on the Exchange in Non- Penny Pilot Securities yield fee code NN and currently receive a standard rebate of $0.36 per contract. In addition, footnote 11 of the fee schedule currently sets forth two different tiers, which provide enhanced rebates of $0.45 to $0.52 per contract to orders that yield fee code NN [[Page 90017]] upon satisfying monthly volume criteria required by the respective tier. To qualify for tier 1 and receive a rebate of $0.45 per contract, the Exchange currently requires that a Member has an ADV equal to or greater than 0.30% of average TCV. The Exchange proposes to reduce the rebate provided in tier 1 from $0.45 per contract to $0.40 per contract. The Exchange also proposes to update the Standard Rate table to reflect the new rebate. The Exchange does not propose to amend tier 1's required criteria or to modify tier 2 under footnote 11. NBBO Setter Tiers The Exchange offers enhanced rebates under footnote 4 to incentivize aggressive quoting by Market Makers on BZX Options. Specifically, the Exchange offers 5 tiers NBBO Setter Tiers under footnote 4 that provide additional rebates ranging from of $0.02 to $0.05 per contract for Market Maker orders that add liquidity and establish a new NBBO (the ``NBBO Setter Rebate'').\15\ --------------------------------------------------------------------------- \15\ An order that is entered at a price that sets a new NBBO according to then current OPRA data will be determined to have set the NBBO for purposes of the NBBO Setter Rebate without regard to whether a more aggressive order is entered prior to the original order being executed. --------------------------------------------------------------------------- First, the Exchange proposes to modify the fee codes that may qualify for the additional rebates provided by the NBBO Setter Tiers 1 through 4 under footnote 4. Currently, the additional rebates under tiers 1 through 4 are provided to orders that yield fee codes PF,\16\ PM,\17\ PN,\18\ NF, NM \19\ or NN. Meanwhile, the additional rebate under tier 5 is provided to orders that yield fee codes PF, PM, and PN only. To align the fee codes that may qualify for the additional rebates provided under footnote 4, the Exchange proposes to no longer provide the additional rebates provided by tiers 1 through 4 to orders that yield fee codes NF, NM and NN. As amended, the additional rebates provided under tiers 1 through 5 of footnote 4 will be available to orders that yield fee codes PF, PM, and PN. --------------------------------------------------------------------------- \16\ Fee code ``PF'' is appended to Firm, Broker Dealer, and Joint Back Office orders which add liquidity in Penny Pilot options. \17\ Fee code ``PM'' is appended to Market Maker orders which add liquidity in Penny Pilot options. \18\ Fee code ``PN'' is appended to Away Market Maker orders which add liquidity in Penny Pilot options. \19\ Fee code ``NM'' is appended to Market Maker orders which add liquidity in Non-Penny Pilot options. --------------------------------------------------------------------------- Second, the Exchange proposes to amend the required criteria for tier 5 of the NBBO Setter Tier under footnote 4. To qualify for tier 5 and receive an additional rebate of $0.05 per contract, the Exchange currently requires that a Member has an: (1) ADAV in Non-Customer \20\ orders equal to or greater than 1.00% of average TCV; and (2) ADV in Non-Customer orders equal to or greater than 1.80% of average TCV. The Exchange proposes to increase the first prong of the tier's criteria to require that a Member has an ADAV in Non-Customer orders equal to or greater than 2.30% of average TCV. As a result of increasing this threshold, the Exchange proposes to remove the second prong of the tier's criteria and, therefore, no longer require Members to also have an ADV in Non-Customer orders equal to or greater than 1.80% of average TCV to achieve the tier. --------------------------------------------------------------------------- \20\ The term ``Non-Customer'' applies to any transaction which is not identified by a Member for clearing in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ``Professional'' as defined in Exchange Rule 16.1. --------------------------------------------------------------------------- Implementation Date The Exchange proposes to implement these amendments to its fee schedule December 1, 2016. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with the objectives of Section 6 of the Act,\21\ in general, and furthers the objectives of Section 6(b)(4),\22\ 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 changes reflect 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. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f. \22\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Fee Codes NN and NF The Exchange believes that its proposal to reduce the rebates provided by fee codes NN and NF is equitable and reasonable because, while the changes mark a decrease in the rebates for orders that yield fee codes NN or NF, such proposed rebates remain consistent with pricing previously offered by the Exchange as well as competitors of the Exchange \23\ 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. Lastly, the proposed changes to fee codes NN and NF are not unfairly discriminatory because they will apply equally to all Members. --------------------------------------------------------------------------- \23\ The Exchange offers a rebate of $0.36 for Away Market Maker orders which add liquidity in Non-Penny Pilot options, appended with fee code NN. The Nasdaq Stock Market LLC (``Nasdaq'') charges a fee of $0.45 for non-NOM Market Makers orders which add liquidity in non-penny pilot securities. The Exchange offers a rebate of $0.36 for Firm, Broker Dealer, and Joint Back Office orders which add liquidity in Non-Penny Pilot options, appended with fee code NF. Nasdaq charges a fee of $0.45 for Firm and Broker Dealer orders which add liquidity in Non-Penny Pilot options. See the Nasdaq fee schedule available at http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing. NYSE Arca, Inc. (``NYSE Arca'') charges a fee of $0.50 for Firm and Broker Dealer orders which add liquidity in Non-Penny Pilot options. See the NYSE Arca fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf. --------------------------------------------------------------------------- Volume Based Tier Modifications The Exchange believes that the proposed modifications to the tiered 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 modifications proposed herein are also 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 believes the [[Page 90018]] proposed change to each tier's criteria is consistent with the Act. Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tier 2 and 3. As explained above, the Exchange is proposing various slight increases to fees as well as decreases in rebates in order to contribute to the overall profitability of the Exchange. The Exchange believes that its proposal to reduce the rebate in tier 2 and increase the rebate in tier 3 under the Firm, Broker Dealer, and Joint Back Office Non-Penny Pilot Add Volume Tiers in footnote 8 is equitable and reasonable as these changes represent a relatively modest adjustment in rates, which is necessary to fund the continued growth of the Exchange. For the same reason, the Exchange believes that the modest corresponding increase to the required criteria threshold for tier 3 is reasonable, fair and equitable and non-discriminatory, specifically because such increase is designed to incentivize participants to further contribute to market quality to the Exchange and the Exchange will be providing a higher enhanced rebates to participants who qualify. The Exchange also believes that the proposed fees and rebates remain consistent with pricing previously offered by the Exchange as well as competitors of the Exchange and do not represent a significant departure from the Exchange's general pricing structure. Away Market Maker Non-Penny Pilot Add Volume Tier 1. The Exchange believes that its proposal to reduce the rebate provided for Away Market Maker Non-Penny Pilot Add Volume Tier 1 under footnote 11 is reasonable, fair and equitable because the reduced rebate is consistent with similar pricing currently offered by the Exchange. Specifically, tier 1 under footnote 10 and tier 1 under footnote 11 have identical required criteria (i.e. the Member must have an ADV equal to or greater than 0.30% of average TCV) while providing different rebates (i.e., $0.40 per contract under tier 1 of footnote 10 and $0.45 per contract under tier 1 of footnote 11). Reducing the rebate under tier 1 of footnote 11 would result in the rebate provided for under both tier to be the same. 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 levels to be excessive. The proposed decreased rebate will allow the Exchange to earn additional revenue that can be used to offset the addition of new pricing incentives. The Exchange also believes the proposed change is not unfairly discriminatory because it will apply equally to all participants. NBBO Setter Tier 5. The Exchange believes that its proposal to modify the required criteria for the NBBO Setter Tier 5 under footnote 4 is reasonable, fair and equitable because raising the threshold under prong 1 of the required criteria in conjunction with removing the additional requirement under prong 2 results in a similar, but simplified tier requirement which better corresponds to the tier's corresponding rebate. The proposed modifications to tier 5 are also reasonable when compared to the criteria and rebates provided by tier 1 through 4 under footnote 5 [sic]. These modifications also do not mark a significant departure from the Exchange's other NBBO Setter Tiers under footnote 5 [sic], which also generally require a Member satisfy a single criteria. The Exchange also believes the proposed change is not unfairly discriminatory because it will apply equally to all participants. NBBO Setter Tiers Applicable Fee Codes. The Exchange believes that the proposed modifications to the applicable fee codes of the NBBO Setter Tiers are reasonable, fair and equitable. The Exchange believes it is reasonable, fair and equitable to limit the NBBO Setter Tiers' applicability to orders yielding fee codes applicable to Penny Pilot Securities (thus excluding Non-Penny Pilot Securities) and to orders on behalf of participants that are most likely to actively engage in providing liquidity on the Exchange (thus excluding Customers and Professional Customers).\24\ Offering the additional rebates under NBBO Setter Tiers 1 through 4 was not providing the desired result of incentivizing Members to enter orders in Non-Penny Pilot securities that established a new NBBO. Therefore, removing fee codes NF, NM and NN from the NBBO Setter Tier's applicability will have a negligible effect on order flow and market behavior. The Exchange believes it is reasonable to continue to incrementally modify the volume based incentives to help to contribute to the growth of the Exchange. The Exchange also believes the proposed change is not unfairly discriminatory because it will apply equally to all participants. --------------------------------------------------------------------------- \24\ The Exchange notes that when it adopted Tier 5, it limited its applicability to fee codes NF, NM and NN [sic], as it believed those were the fee codes most likely to benefit from the tier's rebate. See Securities Exchange Act Release No. 76130 (October 13, 2015), 80 FR 63257 (October 19 2015) (SR-BATS-2015-85). --------------------------------------------------------------------------- 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 BZX Options. Therefore, the Exchange believes that the amendment to the tiers' thresholds as proposed herein, contributes to, rather than burdens competition, as such change is intended to incentivize participants to increase their participation on the Exchange. 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 \25\ and paragraph (f) of Rule 19b-4 thereunder.\26\ 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. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78s(b)(3)(A). \26\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule [[Page 90019]] change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-2016-83 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BatsBZX-2016-83. 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-BatsBZX-2016-83 and should be submitted on or before January 3, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\27\ --------------------------------------------------------------------------- \27\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016-29801 Filed 12-12-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 239 / Tuesday, December 13, 2016 / Notices 90015
practices, to promote just and equitable provides non-customer and customer Commission and any person, other than
principles of trade, to foster cooperation orders with the opportunity to receive those that may be withheld from the
and coordination with persons engaged an execution at an improved price. public in accordance with the
in regulating, clearing, settling, provisions of 5 U.S.C. 552, will be
C. Self-Regulatory Organization’s
processing information with respect to, available for Web site viewing and
Statement on Comments on the printing in the Commission’s Public
and facilitating transactions in
securities, to remove impediments to Proposed Rule Change Received From Reference Room, 100 F Street NE.,
and perfect the mechanism of a free and Members, Participants, or Others Washington, DC 20549 on official
open market and a national market The Exchange neither solicited nor business days between the hours of
system, and, in general, to protect received comments on the proposed 10:00 a.m. and 3:00 p.m. Copies of such
investors and the public interest. rule change. filing also will be available for
Additionally, the Exchange believes the inspection and copying at the principal
III. Date of Effectiveness of the
proposed rule change is consistent with office of the Exchange. All comments
Proposed Rule Change and Timing for
the Section 6(b)(5) 17 requirement that received will be posted without change;
Commission Action
the rules of an exchange not be designed the Commission does not edit personal
to permit unfair discrimination between Within 45 days of the date of identifying information from
customers, issuers, brokers, or dealers. publication of this notice in the Federal submissions. You should submit only
In particular, the proposed rule Register or within such longer period information that you wish to make
change protects investors and the public up to 90 days (i) as the Commission may available publicly. All submissions
interest because the AIM and FLEX AIM designate if it finds such longer period should refer to File Number SR–CBOE–
pilot programs have allowed (1) smaller to be appropriate and publishes its 2016–084, and should be submitted on
non-FLEX option and FLEX Option reasons for so finding or (ii) as to which or before January 3, 2017.
orders to receive the opportunity for the Exchange consents, the Commission For the Commission, by the Division of
price improvement pursuant to the AIM will: Trading and Markets, pursuant to delegated
auction, and (2) with respect to non- A. By order approve or disapprove authority.18
FLEX options, Agency Orders in AIM such proposed rule change, or Eduardo A. Aleman,
auctions that are concluded early B. institute proceedings to determine Assistant Secretary.
because of quote lock on the Exchange whether the proposed rule change
[FR Doc. 2016–29804 Filed 12–12–16; 8:45 am]
to receive the benefit of the lock price. should be disapproved.
BILLING CODE 8011–01–P
Additionally, as noted above, the AIM IV. Solicitation of Comments
pilot program offers meaningful price
improvement and making it permanent Interested persons are invited to
submit written data, views, and SECURITIES AND EXCHANGE
will not have an adverse effect on the COMMISSION
market functioning on the Exchange arguments concerning the foregoing,
outside of AIM. Furthermore, although including whether the proposed rule [Release No. 34–79496; File No. SR–
it’s likely that there will continue to be change is consistent with the Act. BatsBZX–2016–83]
no BBO prior to a FLEX AIM, the FLEX Comments may be submitted by any of
the following methods: Self-Regulatory Organizations; Bats
AIM mechanism will continue to offer
BZX Exchange, Inc.; Notice of Filing
the possibility for price improvement Electronic Comments and Immediate Effectiveness of a
beyond the initiator’s stop price and
making the pilot permanent will not • Use the Commission’s Internet Proposed Rule Change Related to Fees
comment form (http://www.sec.gov/ for Use of the Exchange’s Equity
have an adverse effect on the market
rules/sro.shtml); or Options Platform
functioning on the Exchange outside of
AIM. • Send an email to rule-comments@ December 7, 2016.
sec.gov. Please include File Number SR–
B. Self-Regulatory Organization’s Pursuant to Section 19(b)(1) of the
CBOE–2016–084 on the subject line.
Statement on Burden on Competition Securities Exchange Act of 1934 (the
Paper Comments ‘‘Act’’),1 and Rule 19b–4 thereunder,2
CBOE does not believe that the notice is hereby given that on November
proposed rule change will impose any • Send paper comments in triplicate
to Secretary, Securities and Exchange 30, 2016, Bats BZX Exchange, Inc. (the
burden on competition that is not ‘‘Exchange’’ or ‘‘BZX’’) filed with the
necessary or appropriate in furtherance Commission, 100 F Street NE.,
Washington, DC 20549–1090. Securities and Exchange Commission
of the purposes of the Act. The (the ‘‘Commission’’) the proposed rule
Exchange does not believe the proposed All submissions should refer to File
change as described in Items I, II, and
rule changes impose any burden on Number SR–CBOE–2016–084. This file
III below, which Items have been
intramarket competition because it number should be included on the
prepared by the Exchange. The
applies to all Trading Permit Holders. In subject line if email is used. To help the
Exchange has designated the proposed
addition, the Exchange does not believe Commission process and review your
rule change as one establishing or
the proposed rule changes will impose comments more efficiently, please use
changing a member due, fee, or other
any burden on intermarket competition, only one method. The Commission will
charge imposed by the Exchange under
as they are merely making pilot post all comments on the Commission’s
Section 19(b)(3)(A)(ii) of the Act 3 and
programs already in existence Internet Web site (http://www.sec.gov/
Rule 19b–4(f)(2) thereunder,4 which
pmangrum on DSK3GDR082PROD with NOTICES
permanent and which are available to rules/sro.shtml). Copies of the
renders the proposed rule change
all market participants through Trading submission, all subsequent
effective upon filing with the
Permit Holders. Additionally, CBOE amendments, all written statements
believes that the AIM and FLEX AIM with respect to the proposed rule 18 17 CFR 200.30–3(a)(12).
pilot programs have improved change that are filed with the 1 15 U.S.C. 78s(b)(1).
competition because the auction process Commission, and all written 2 17 CFR 240.19b–4.
communications relating to the 3 15 U.S.C. 78s(b)(3)(A)(ii).
17 Id. proposed rule change between the 4 17 CFR 240.19b–4(f)(2).
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![90018 Federal Register / Vol. 81, No. 239 / Tuesday, December 13, 2016 / Notices
proposed change to each tier’s criteria is NBBO Setter Tier 5. The Exchange not impose any burden on competition
consistent with the Act. believes that its proposal to modify the that is not necessary or appropriate in
Firm, Broker Dealer, and Joint Back required criteria for the NBBO Setter furtherance of the purposes of the Act.
Office Non-Penny Pilot Add Volume Tier 5 under footnote 4 is reasonable, The Exchange does not believe that the
Tier 2 and 3. As explained above, the fair and equitable because raising the proposed change represents a significant
Exchange is proposing various slight threshold under prong 1 of the required departure from previous pricing offered
increases to fees as well as decreases in criteria in conjunction with removing by the Exchange or pricing offered by
rebates in order to contribute to the the additional requirement under prong the Exchange’s competitors.
overall profitability of the Exchange. 2 results in a similar, but simplified tier Additionally, Members may opt to
The Exchange believes that its proposal requirement which better corresponds disfavor the Exchange’s pricing if they
to reduce the rebate in tier 2 and to the tier’s corresponding rebate. The believe that alternatives offer them
increase the rebate in tier 3 under the proposed modifications to tier 5 are also better value. Accordingly, the Exchange
Firm, Broker Dealer, and Joint Back reasonable when compared to the does not believe that the proposed
Office Non-Penny Pilot Add Volume criteria and rebates provided by tier 1 change will impair the ability of
Tiers in footnote 8 is equitable and through 4 under footnote 5 [sic]. These Members or competing venues to
reasonable as these changes represent a modifications also do not mark a maintain their competitive standing in
relatively modest adjustment in rates, significant departure from the the financial markets. The Exchange
which is necessary to fund the Exchange’s other NBBO Setter Tiers does not believe that the proposed
continued growth of the Exchange. For under footnote 5 [sic], which also change to the Exchange’s tiered pricing
the same reason, the Exchange believes generally require a Member satisfy a structure burdens competition, but
that the modest corresponding increase single criteria. The Exchange also instead, enhances competition as it is
to the required criteria threshold for tier believes the proposed change is not intended to increase the
3 is reasonable, fair and equitable and unfairly discriminatory because it will competitiveness of the Exchange. The
non-discriminatory, specifically because apply equally to all participants. Exchange also believes the proposal
such increase is designed to incentivize NBBO Setter Tiers Applicable Fee enhances competition by seeking to
participants to further contribute to Codes. The Exchange believes that the draw additional volume to BZX
market quality to the Exchange and the proposed modifications to the Options. Therefore, the Exchange
Exchange will be providing a higher applicable fee codes of the NBBO Setter believes that the amendment to the tiers’
enhanced rebates to participants who Tiers are reasonable, fair and equitable. thresholds as proposed herein,
qualify. The Exchange also believes that The Exchange believes it is reasonable, contributes to, rather than burdens
the proposed fees and rebates remain fair and equitable to limit the NBBO competition, as such change is intended
consistent with pricing previously Setter Tiers’ applicability to orders to incentivize participants to increase
offered by the Exchange as well as yielding fee codes applicable to Penny their participation on the Exchange.
competitors of the Exchange and do not Pilot Securities (thus excluding Non-
represent a significant departure from Penny Pilot Securities) and to orders on C. Self-Regulatory Organization’s
the Exchange’s general pricing structure. behalf of participants that are most Statement on Comments on the
Away Market Maker Non-Penny Pilot likely to actively engage in providing Proposed Rule Change Received From
Add Volume Tier 1. The Exchange liquidity on the Exchange (thus Members, Participants, or Others
believes that its proposal to reduce the excluding Customers and Professional The Exchange has not solicited, and
rebate provided for Away Market Maker Customers).24 Offering the additional does not intend to solicit, comments on
Non-Penny Pilot Add Volume Tier 1 rebates under NBBO Setter Tiers 1 this proposed rule change. The
under footnote 11 is reasonable, fair and through 4 was not providing the desired Exchange has not received any written
equitable because the reduced rebate is result of incentivizing Members to enter comments from members or other
consistent with similar pricing currently orders in Non-Penny Pilot securities interested parties.
offered by the Exchange. Specifically, that established a new NBBO. Therefore,
tier 1 under footnote 10 and tier 1 under removing fee codes NF, NM and NN III. Date of Effectiveness of the
footnote 11 have identical required from the NBBO Setter Tier’s Proposed Rule Change and Timing for
criteria (i.e. the Member must have an applicability will have a negligible Commission Action
ADV equal to or greater than 0.30% of effect on order flow and market The foregoing rule change has become
average TCV) while providing different behavior. The Exchange believes it is effective pursuant to Section 19(b)(3)(A)
rebates (i.e., $0.40 per contract under reasonable to continue to incrementally of the Act 25 and paragraph (f) of Rule
tier 1 of footnote 10 and $0.45 per modify the volume based incentives to 19b–4 thereunder.26 At any time within
contract under tier 1 of footnote 11). help to contribute to the growth of the 60 days of the filing of the proposed rule
Reducing the rebate under tier 1 of Exchange. The Exchange also believes change, the Commission summarily may
footnote 11 would result in the rebate the proposed change is not unfairly temporarily suspend such rule change if
provided for under both tier to be the discriminatory because it will apply it appears to the Commission that such
same. The Exchange notes that it equally to all participants. action is necessary or appropriate in the
operates in a highly competitive market public interest, for the protection of
in which market participants can B. Self-Regulatory Organization’s investors, or otherwise in furtherance of
readily direct order flow to competing Statement on Burden on Competition the purposes of the Act.
venues if they deem fee levels to be The Exchange believes the proposed
IV. Solicitation of Comments
pmangrum on DSK3GDR082PROD with NOTICES
excessive. The proposed decreased amendment to its fee schedule would
rebate will allow the Exchange to earn Interested persons are invited to
additional revenue that can be used to 24 The Exchange notes that when it adopted Tier submit written data, views, and
offset the addition of new pricing 5, it limited its applicability to fee codes NF, NM arguments concerning the foregoing,
incentives. The Exchange also believes and NN [sic], as it believed those were the fee codes
most likely to benefit from the tier’s rebate. See
including whether the proposed rule
the proposed change is not unfairly Securities Exchange Act Release No. 76130 (October
discriminatory because it will apply 13, 2015), 80 FR 63257 (October 19 2015) (SR– 25 15 U.S.C. 78s(b)(3)(A).
equally to all participants. BATS–2015–85). 26 17 CFR 240.19b–4(f).
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![Federal Register / Vol. 81, No. 239 / Tuesday, December 13, 2016 / Notices 90019
change is consistent with the Act. SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
Comments may be submitted by any of COMMISSION Statement of the Purpose of, and the
the following methods: Statutory Basis for, the Proposed Rule
[Release No. 34–79493; File No. SR–NYSE– Change
Electronic Comments
2016–82] 1. Purpose
• Use the Commission’s Internet The purpose of this filing is to extend
comment form (http://www.sec.gov/ Self-Regulatory Organizations; New
the pilot period of the Retail Liquidity
rules/sro.shtml); or York Stock Exchange LLC; Notice of
Program, currently scheduled to expire
• Send an email to rule-comments@ Filing and Immediate Effectiveness of on December 31, 2016,4 until June 30,
sec.gov. Please include File Number SR– Proposed Rule Change To Extend the 2017.
BatsBZX–2016–83 on the subject line. Pilot Period for the Exchange’s Retail
Liquidity Program Background
Paper Comments In July 2012, the Commission
December 7, 2016. approved the Retail Liquidity Program
• Send paper comments in triplicate
Pursuant to Section 19(b)(1) 1 of the on a pilot basis.5 The Program is
to Brent J. Fields, Secretary, Securities designed to attract retail order flow to
Securities Exchange Act of 1934 (the
and Exchange Commission, 100 F Street the Exchange, and allows such order
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
NE., Washington, DC 20549–1090. flow to receive potential price
notice is hereby given that on November
All submissions should refer to File 28, 2016, New York Stock Exchange improvement. The Program is currently
Number SR–BatsBZX–2016–83. This file LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed limited to trades occurring at prices
number should be included on the with the Securities and Exchange equal to or greater than $1.00 per share.
subject line if email is used. To help the Commission (the ‘‘Commission’’) the Under the Program, Retail Liquidity
Commission process and review your proposed rule change as described in Providers (‘‘RLPs’’) are able to provide
comments more efficiently, please use potential price improvement in the form
Items I and II below, which Items have
only one method. The Commission will of a non-displayed order that is priced
been prepared by the self-regulatory
post all comments on the Commission’s better than the Exchange’s best
organization. The Commission is protected bid or offer (‘‘PBBO’’), called
Internet Web site (http://www.sec.gov/ publishing this notice to solicit
rules/sro.shtml). Copies of the a Retail Price Improvement Order
comments on the proposed rule change (‘‘RPI’’). When there is an RPI in a
submission, all subsequent from interested persons.
amendments, all written statements particular security, the Exchange
with respect to the proposed rule I. Self-Regulatory Organization’s disseminates an indicator, known as the
change that are filed with the Statement of the Terms of Substance of Retail Liquidity Identifier, indicating
Commission, and all written the Proposed Rule Change that such interest exists. Retail Member
Organizations (‘‘RMOs’’) can submit a
communications relating to the
The Exchange proposes to extend the Retail Order to the Exchange, which
proposed rule change between the
pilot period for the Exchange’s Retail would interact, to the extent possible,
Commission and any person, other than
Liquidity Program (the ‘‘Retail Liquidity with available contra-side RPIs.
those that may be withheld from the The Retail Liquidity Program was
public in accordance with the Program’’ or the ‘‘Program’’), which is
currently scheduled to expire on approved by the Commission on a pilot
provisions of 5 U.S.C. 552, will be basis. Pursuant to NYSE Rule 107C(m),
available for Web site viewing and December 31, 2016, until June 30, 2017.
The proposed rule change is available the pilot period for the Program is
printing in the Commission’s Public scheduled to end on December 31, 2016.
Reference Room, 100 F Street NE., on the Exchange’s Web site at
Washington, DC 20549, on official www.nyse.com, at the principal office of Proposal To Extend the Operation of the
business days between the hours of the Exchange, and at the Commission’s Program
10:00 a.m. and 3:00 p.m. Copies of the Public Reference Room. The Exchange established the Retail
filing also will be available for Liquidity Program in an attempt to
II. Self-Regulatory Organization’s
inspection and copying at the principal attract retail order flow to the Exchange
Statement of the Purpose of, and
office of the Exchange. All comments by potentially providing price
Statutory Basis for, the Proposed Rule
received will be posted without change; improvement to such order flow. The
the Commission does not edit personal Change
Exchange believes that the Program
identifying information from In its filing with the Commission, the promotes competition for retail order
submissions. You should submit only self-regulatory organization included flow by allowing Exchange members to
information that you wish to make statements concerning the purpose of, submit RPIs to interact with Retail
available publicly. All submissions and basis for, the proposed rule change Orders. Such competition has the ability
should refer to File Number SR– and discussed any comments it received to promote efficiency by facilitating the
BatsBZX–2016–83 and should be on the proposed rule change. The text price discovery process and generating
submitted on or before January 3, 2017. of those statements may be examined at additional investor interest in trading
For the Commission, by the Division of the places specified in Item IV below. securities, thereby promoting capital
Trading and Markets, pursuant to delegated formation. The Exchange believes that
The Exchange has prepared summaries,
pmangrum on DSK3GDR082PROD with NOTICES
authority.27 extending the pilot is appropriate
set forth in sections A, B, and C below,
because it will allow the Exchange and
Eduardo A. Aleman, of the most significant parts of such
Assistant Secretary. statements. 4 See Securities Exchange Act Release No. 78600
[FR Doc. 2016–29801 Filed 12–12–16; 8:45 am] (August 17, 2016), 81 FR 57642 (August 23, 2016)
(SR–NYSE–2016–54).
BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1). 5 See Securities Exchange Act Release No. 67347
2 15 U.S.C. 78a. (July 3, 2012), 77 FR 40673 (July 10, 2012) (‘‘RLP
27 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. Approval Order’’) (SR–NYSE–2011–55).
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Document Created: 2016-12-13 02:44:06
Document Modified: 2016-12-13 02:44:06
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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