81 FR 95693 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule To Adopt Fees for BZX Summary Depth and Amend Fees for BZX Depth

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 249 (December 28, 2016)

Page Range		95693-95699
FR Document		2016-31298

Federal Register, Volume 81 Issue 249 (Wednesday, December 28, 2016)

[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Notices]
[Pages 95693-95699]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-31298]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79636; File No. SR-BatsBZX-2016-87]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Market Data Section of Its Fee Schedule To Adopt Fees for BZX
Summary Depth and Amend Fees for BZX Depth

December 21, 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 December 14, 2016, Bats BZX Exchange, Inc. (``BZX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 Market Data section of
its fee schedule to: (i) Adopt fees for a new market data product
called BZX Summary Depth; and (ii) amend the fees for BZX Depth.
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 the Market Data section of its fee
schedule to: (i) Adopt fees for a new market data product called BZX
Summary Depth; and (ii) amend the fees for BZX Depth.
BZX Summary Depth
BZX Summary Depth is a data feed that will provide aggregated two-
sided quotations for all displayed orders entered into the System \5\
for up to five (5) price levels for securities traded on the Exchange
and for which the Exchange reports quotes under the Consolidated Tape
Association (``CTA'') Plan or the Nasdaq/UTP Plan.\6\ BZX Summary Depth
will also contain the individual last sale information, Market Status,
Trading Status, and Trade Break messages. The individual last sale
information will include the price, size, and time of execution. The
last sale message will also include the cumulative number of shares
executed on the Exchange for that trading day. The Exchange intends to
begin to offer BZX Summary Depth on January 3, 2017.\7\
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\5\ ``System'' is defined as the ``the electronic communications
and trading facility designated by the Board through which
securities orders of Users Are consolidated for ranking, execution
and, when applicable, routing away.'' See Exchange Rule 1.5(aa).
\6\ See Exchange Rule 11.22(m).
\7\ See Reminder: Bats Global Markets to Introduce Bats Summary
Depth Feeds on January 3, 2017, http://cdn.batstrading.com/resources/release_notes/2017/Reminder-Bats-Global-Markets-to-Introduce-Bats-Summary-Depth-Feeds-on-Jan-3-2017.pdf.
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The Exchange now proposes to amend its fee schedule to incorporate
fees for distribution of BZX Summary Depth to subscribers.\8\ The
proposed fees include the following, each of which are described in
detail below: (i) Distribution Fees for both Internal and External
Distributors; \9\ (ii) Usage Fees for both Professional \10\ and Non-
Professional \11\ Users; (iii) an Enterprise Fee; and (iv) a Digital
Media Enterprise Fee.
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\8\ The Exchange notes that its affiliated exchanges, Bats EDGX
Exchange, Inc. (``EDGX''), Bats EDGA Exchange, Inc. (``EDGA'') and
Bats BYX Exchange, Inc. (``BYX'', together with the Exchange, EDGX
and EDGA, the ``Bats Exchanges''), also intent to file proposed rule
changes with Commission to adopt similar fees for their respective
Summary Depth market data product.
\9\ A ``Distributor'' is defined as ``any entity that receives
the Exchange Market Data product directly from the Exchange or
indirectly through another entity and then distributes it internally
or externally to a third party.'' See the Exchange's fee schedule
available at http://www.bats.com/us/equities/membership/fee_schedule/bzx/. An ``Internal Distributor'' is defined as ``a
Distributor that receives the Exchange Market Data product and then
distributes that data to one or more Users within the Distributor's
own entity.'' Id. An ``External Distributor'' is defined as ``a
Distributor that receives the Exchange Market Data product and then
distributes that data to a third party or one or more Users outside
the Distributor's own entity.'' Id.''
\10\ A ``Professional User'' is defined as ``any User other than
a Non-Professional User.'' See the Exchange's fee schedule available
at http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
\11\ A ``Non-Professional User'' is defined as ``a natural
person who is not: (i) Registered or qualified in any capacity with
the Commission, the Commodity Futures Trading Commission, any state
securities agency, any securities exchange or association, or any
commodities or futures contract market or association; (ii) engaged
as an ``investment adviser'' as that term is defined in Section
202(a)(11) of the Investment Advisers Act of 1940 (whether or not
registered or qualified under that Act); or (iii) employed by a bank
or other organization exempt from registration under federal or
state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt.'' Id.
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Distribution Fees. As proposed, each Internal Distributor that
receives BZX

[[Page 95694]]

Summary Depth shall pay a fee of $5,000 per month. The Exchange does
not propose to charge any User fees for BZX Summary Depth where the
data is received and subsequently internally distributed to
Professional or Non-Professional Users. In addition, the Exchange
proposes to charge also External Distributors that receive BZX Summary
Depth a fee of $5,000 per month.
User Fees. The Exchange proposes to charge External Distributors
that redistribute BZX Summary Depth different fees for their
Professional Users and Non-Professional Users. The Exchange will assess
a monthly fee for Professional Users of $5.00 per User. Non-
Professional Users will be assessed a monthly fee of $0.15 per User.
The Exchange does not propose to charge per User fees to Internal
Distributors.
External Distributors that receive BZX Summary Depth will be
required to count every Professional User and Non-Professional User to
which they provide BZX Summary Depth, the requirements for which are
identical to that currently in place for other market data products
offered by the Exchange.\12\ Thus, the External Distributor's count
will include every person and device that accesses the data regardless
of the purpose for which the individual or device uses the data.
External Distributors must report all Professional and Non-Professional
Users in accordance with the following:
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\12\ See Securities Exchange Act Release Nos. 74285 (February
18, 2015); 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11)
(proposing fees for the Bats One Feed); 75406 (July 9, 2015), 80 FR
41522 (July 15, 2015) (SR-BATS-2015-48) (proposing user fees for the
BZX Top and Last Sale data feeds); and 75785 (August 28, 2015), 80
FR 53360 (September 3, 2015) (SR-BATS-2015-64) (proposing fees for
BZX Book Viewer).
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In connection with an External Distributor's distribution
of BZX Summary Depth, the Distributor should count as one User each
unique User that the Distributor has entitled to have access to BZX
Summary Depth. However, where a device is dedicated specifically to a
single individual, the Distributor should count only the individual and
need not count the device.
The External Distributor should identify and report each
unique User. If a User uses the same unique method to gain access to
BZX Summary Depth, the Distributor should count that as one User.
However, if a unique User uses multiple methods to gain access to BZX
Summary Depth (e.g., a single User has multiple passwords and user
identifications), the External Distributor should report all of those
methods as an individual User.
External Distributors should report each unique individual
person who receives access through multiple devices as one User so long
as each device is dedicated specifically to that individual.
If an External Distributor entitles one or more
individuals to use the same device, the External Distributor should
include only the individuals, and not the device, in the count.
Each External Distributor will receive a credit against its monthly
Distribution Fee for BZX Summary Depth equal to the amount of its
monthly Usage Fees up to a maximum of the Distribution Fee for BZX
Summary Depth. For example, an External Distributor will be subject to
a $5,000 monthly Distribution Fee where they receive BZX Summary Depth.
If that External Distributor reports User quantities totaling $5,000 or
more of monthly usage of BZX Summary Depth, it will pay no net
Distribution Fee, whereas if that same External Distributor were to
report User quantities totaling $4,000 of monthly usage, it will pay a
net of $1,000 for the Distribution Fee. External Distributors will
remain subject to the per User fees discussed above.
Enterprise Fee. The Exchange also proposes to establish a $30,000
per month Enterprise Fee that will permit a recipient firm who receives
BZX Summary Depth from an External Distributor to receive the data for
an unlimited number of Professional and Non-Professional Users. For
example, if a recipient firm had 15,000 Professional Users who each
receive BZX Summary Depth at $5.00 per month, then that recipient firm
will pay $75,000 per month in Professional Users fees. Under the
proposed Enterprise Fee, the recipient firm will pay a flat fee of
$30,000 for an unlimited number of Professional and Non-Professional
Users for BZX Summary Depth. A recipient firm must pay a separate
Enterprise Fee for each External Distributor that controls the display
of BZX Summary Depth if it wishes such User to be covered by an
Enterprise Fee rather than by per User fees. A recipient firm that pays
the Enterprise Fee will not have to report its number of such Users on
a monthly basis. However, every six months, a recipient firm must
provide the Exchange with a count of the total number of natural person
users of each product, including both Professional and Non-Professional
Users. Lastly, the proposed Enterprise Fee would be counted towards the
Distribution Fee credit described above, under which an External
Distributor receives a credit towards its Distribution Fee equal to the
amount of its monthly BZX Summary Depth User fees.
Digital Media Enterprise Fee. The Exchange proposes to adopt a
Digital Media Enterprise Fee of $7,500 per month for BZX Summary Depth.
As an alternative to proposed User fees discussed above, a recipient
firm may purchase a monthly Digital Media Enterprise license to receive
BZX Summary Depth from an External Distributor to distribute to an
unlimited number of Professional and Non-Professional Users for viewing
via television, Web sites, and mobile devices for informational and
non-trading purposes only without having to account for the extent of
access to the data or the report the number of Users to the Exchange.
Lastly, the proposed Digital Media Enterprise Fee would be counted
towards the Distribution Fee credit described above, under which an
External Distributor receives a credit towards its Distribution Fee
equal to the amount of its monthly BZX Summary Depth User fees.
BZX Depth
BZX Depth is an uncompressed market data feed that provides depth-
of-book quotations and execution information based on equity orders
entered into the System.\13\ Currently, the Exchange charges fees for
both internal and external distribution of BZX Depth. The cost of BZX
Depth for an Internal Distributor is currently $1,500 per month. The
Exchange also separately charges an External Distributor of BZX Depth a
flat fee of $5,000 per month. The Exchange does not currently charge
Internal and External Distributors separate display User fees. The
Exchange also charges a fee for Non-Display Usage \14\ by Trading
Platforms \15\ by which subscribers to BZX Depth are charged a fee of
$5,000 per month. This fee is assessed in addition to existing
Distribution fees. The Exchange now proposes to amend its fee schedule
to incorporate Usage Fees for both Professional and Non-Professional
Users

[[Page 95695]]

and an Enterprise Fee for BZX Depth. Each of these changes are
described in detail below.
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\13\ See Exchange Rule 11.22(a) and (c).
\14\ The term ``Non-Display Usage'' is defined as ``any method
of accessing a Market Data product that involves access or use by a
machine or automated device without access or use of a display by a
natural person or persons.'' See the Exchange's fee schedule
available at http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
\15\ The term ``Trading Platform'' is defined as ``any execution
platform operated as or by a registered National Securities Exchange
(as defined in Section 3(a)(1) of the Exchange Act), an Alternative
Trading System (as defined in Rule 300(a) of Regulation ATS), or an
Electronic Communications Network (as defined in Rule 600(b)(23) of
Regulation NMS).'' See the Exchange's fee schedule available at
http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
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User Fees. The Exchange proposes to charge Internal and External
Distributors that redistribute BZX Depth different fees for their
Professional Users and Non-Professional Users.\16\ The Exchange will
assess a monthly fee for Professional Users of $40.00 per User. Non-
Professional Users will be assessed a monthly fee of $5.00 per User.
Distributors that receive BZX Depth will be required to count every
Professional User and Non-Professional User to which they provide BZX
Depth, the requirements for which are identical to that set forth above
for BZX Summary Depth and as currently in place for other market data
products offered by the Exchange.\17\
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\16\ The Exchange notes that, unlike as proposed for BZX Summary
Depth described above, both Internal and External Distributors of
BZX Depth would be charged the same User fee for their Professional
and Non-Professional Users.
\17\ See supra note 12 and accompanying text.
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Enterprise Fee. The Exchange also proposes to establish a $100,000
per month Enterprise Fee that will permit an Internal Distributor,
External Distributor, or a recipient firm who receives BZX Depth from
an External Distributor to receive the data for an unlimited number of
Professional and Non-Professional Users. For example, if a recipient
firm had 15,000 Professional Users who each receive BZX Depth at $40.00
per month, then that recipient firm will pay $600,000 per month in
Professional Users fees. Under the proposed Enterprise Fee, the
recipient firm will pay a flat fee of $100,000 for an unlimited number
of Professional and Non-Professional Users for BZX Depth. Like proposed
above for BZX Summary Depth, a recipient firm must pay a separate
Enterprise Fee for each External Distributor that controls the display
of BZX Depth if it wishes such User to be covered by an Enterprise Fee
rather than by per User fees. A recipient firm that pays the Enterprise
Fee will not have to report its number of such Users on a monthly
basis. However, every six months, a recipient firm must provide the
Exchange with a count of the total number of natural person users of
each product, including both Professional and Non-Professional Users.
Implementation Date
The Exchange intends to implement the proposed fee change on
January 3, 2017.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\18\ in general, and
furthers the objectives of Section 6(b)(4),\19\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data. The Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply uniformly to all
recipients of Exchange data. The Exchange believes the proposed fees
are competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to recipients. The Exchange also
believes it is reasonable to charge different rates for BZX Depth and
BZX Summary Depth as both products different levels of content (e.g.,
BZX Depth contains quotations for all individual orders while BZX
Summary Depth contains the aggregation quotation information for all
orders up to five (5) price levels). Lastly, the Exchange also believes
that the proposed fees are reasonable and non-discriminatory because
they will apply uniformly to all recipients of Exchange data.
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\18\ 15 U.S.C. 78f.
\19\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \20\ in that it supports (i)
fair competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.
Furthermore, the proposed rule change is consistent with Rule 603 of
Regulation NMS,\21\ which provides that any national securities
exchange that distributes information with respect to quotations for or
transactions in an NMS stock do so on terms that are not unreasonably
discriminatory. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
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\20\ 15 U.S.C. 78k-1.
\21\ 17 CFR 242.603.
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In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors will be subject to the proposed fees on an equivalent basis.
BZX Summary Depth and BZX Depth are distributed and purchased on a
voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. Firms have a wide variety of
alternative market data products from which to choose, such as similar
proprietary data products offered by other exchanges and consolidated
data. Moreover, the Exchange is not required to make any proprietary
data products available or to offer any specific pricing alternatives
to any customers.
In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in the Exchange's
Statement on Burden on Competition, the existence of alternatives to
BZX Summary Depth and BZX Depth further ensures that the Exchange
cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and subscribers can elect such
alternatives. That is, the Exchange competes with other exchanges (and
their affiliates) that provide similar market data products. If another
exchange (or its affiliate) were to charge less to distribute its
similar product than the Exchange charges to consolidate and distribute
BZX Summary Depth and BZX Depth, prospective Users likely would not
subscribe to, or would cease subscribing to, BZX Summary Depth and BZX
Depth.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or rate-making approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\22\
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\22\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).

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[[Page 95696]]

BZX Summary Depth
Distribution Fee. The Exchange believes that the proposed
Distribution Fees are also reasonable, equitably allocated, and not
unreasonably discriminatory. The fees for Members and non-Members are
uniform except with respect to reasonable distinctions with respect to
internal and external distribution. The Exchange believes that the
Distribution Fees for BZX Summary Depth are reasonable and fair in
light of alternatives offered by other market centers. For example, BZX
Summary Depth provides investors with alternative market data and
competes with similar market data product currently offered by the New
York Stock Exchange, Inc. (``NYSE'') and the Nasdaq Stock Market LLC
(``Nasdaq'').\23\ Specifically, the NYSE charges an access fee of
$5,000 per month for NYSE OpenBook,\24\ which is equal to the External
Distribution fee proposed herein for BZX Summary Depth.
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\23\ See Nasdaq Rule 7023(a)(1)(C) (describing Nasdaq TotalView
is a depth-of-book data feed that includes all orders and quotes
from all Nasdaq members displayed in the Nasdaq Market Center as
well as the aggregate size of such orders and quotes at each price
level in the execution functionality of the Nasdaq Market Center).
See also Nasdaq Book Viewer, a description of which is available at
https://data.nasdaq.com/Book Viewer.aspx. See NYSE OpenBook
available at http://www.nyxdata.com/openbook (providing real-time
view of the NYSE limit order book).
\24\ See NYSE Market Data Pricing dated November 2016 available
at http://www.nyxdata.com/. Nasdaq charges distribution fees ranging
from $375 for 1-39 subscribers to $75,000 for more than 250
subscribers. See Nasdaq Rule 7023(b)(4).
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User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for BZX Summary Depth are equitable and
reasonable because they will result in greater availability to
Professional and Non-Professional Users. Moreover, introducing a modest
Non-Professional User fee for BZX Summary Depth is reasonable because
it provides an additional method for retail investors to access BZX
Summary Depth data by providing the same data that is available to
Professional Users. The Exchange believes that the proposed fees are
equitable and not unfairly discriminatory because they will be charged
uniformly to recipient firms and Users. The fee structure of
differentiated Professional and Non-Professional fees is utilized by
the Exchange for the Bats One Feed and has long been used by other
exchanges for their proprietary data products, and by the Nasdaq UTP
and the CTA and CQ Plans in order to reduce the price of data to retail
investors and make it more broadly available.\25\ Offering BZX Summary
Depth to Non-Professional Users with the same data available to
Professional Users results in greater equity among data recipients.
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\25\ See Securities Exchange Act Release Nos. 74285 (February
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February
24, 2015) (SR-BYX-2015-09) (``Initial BATS One Feed Fee Filings'').
See also, e.g., Securities Exchange Act Release No. 20002, File No.
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA
data); and Nasdaq Rules 7023(b), 7047.
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In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE and Nasdaq.
Specifically, NYSE offers NYSE OpenBook for a monthly fee of $60.00 per
professional subscriber and $15 per non-professional subscriber.\26\
Nasdaq offers Nasdaq TotalView-Aggregated for a monthly fee of $70.00
per professional subscriber and $14 per non-professional
subscriber.\27\ The Exchange's proposed per User Fees for BZX Summary
Depth are less than the NYSE and Nasdaq fees.
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\26\ See NYSE Market Data Pricing dated November 2016 available
at http://www.nyxdata.com/.
\27\ See Nasdaq Rule 7023(b)(2).
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Enterprise Fee. The proposed Enterprise Fee for BZX Summary Depth
is equitable and reasonable as the fees proposed are less than the
enterprise fees currently charged for Nasdaq TotalView-Aggregated.
Nasdaq charges an enterprise fee of $100,000 per month for Nasdaq
TotalView-Aggregated,\28\ which is far greater than the proposed
Enterprise Fee of $30,000 per month for BZX Summary Depth. In addition,
the Enterprise Fee proposed by the Exchange could result in a fee
reduction for recipient firms with a large number of Professional and
Non-Professional Users. If a recipient firm has a smaller number of
Professional Users of BZX Summary Depth, then it may continue using the
per User structure and benefit from the per User Fee reductions. By
reducing prices for recipient firms with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute BZX Summary Depth, thereby
expanding the distribution of this market data for the benefit of
investors.
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\28\ See Nasdaq Rule 7023(c)(2) (stating that a distributor that
is also a broker-dealer pays a monthly fee of $100,000 for the right
to provide Nasdaq TotalView and for display usage for internal
distribution, or for external distribution to both professional and
non-professional subscribers with whom the firm has a brokerage
relationship.) Nasdaq also charges an enterprise fee of $25,000 to
provide Nasdaq TotalView to an unlimited number of non-professional
subscribers only. See Nasdaq Rule 7023(c)(1).
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The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large numbers of Professional and Non-Professional Users.
Firms that pay the proposed Enterprise Fee will not have to report the
number of Users on a monthly basis as they currently do, but rather
will only have to count natural person users every six months, which is
a significant reduction in administrative burden. Finally, the Exchange
believes that it is equitable and not unfairly discriminatory to
establish an Enterprise Fee because it reduces the Exchange's costs and
the Distributor's administrative burdens in tracking and auditing large
numbers of Users.
Digital Media Enterprise Fee. The Exchange believes that the
proposed Digital Media Enterprise Fee for BZX Summary Depth provides
for an equitable allocation of reasonable fees among recipients of the
data and is not designed to permit unfair discrimination among
customers, brokers, or dealers. In establishing the Digital Media
Enterprise Fee, the Exchange recognizes that there is demand for a more
seamless and easier-to-administer data distribution model that takes
into account the expanded variety of media and communication devices
that investors utilize today. The Exchange believes the Digital Media
Enterprise Fee will be easy to administer because data recipients that
purchase it would not be required to differentiate between Professional
and Non-Professional Users, account for the extent of access to the
data, or report the number of Users. This is a significant reduction on
a recipient firm's administrative burdens and is a significant value to
investors. For example, a television broadcaster could display BZX
Summary Depth data during market-related programming and on its Web
site or allow viewers to view the data via their mobile devices,
creating a more seamless distribution

[[Page 95697]]

model that will allow investors more choice in how they receive and
view market data, all without having to account for and/or measure who
accesses the data and how often they do so.
The proposed Digital Media Enterprise Fee is equitable and
reasonable because it will also enable recipient firms to more widely
distribute data from BZX Summary Depth to investors for informational
purposes at a lower cost than is available today. For example, a
recipient firm may purchase an Enterprise license in the amount of
$30,000 per month for to receive BZX Summary Depth from an External
Distributor for an unlimited number of Professional and Non-
Professional Users, which is greater than the proposed Digital Media
Enterprise Fee. The Exchange also believes the amount of the Digital
Media Enterprise Fee is reasonable as compared to the existing
enterprise fees discussed above because the distribution of BZX Summary
Depth data is limited to television, Web sites, and mobile devices for
informational purposes only, while distribution of BZX Summary Depth
data pursuant to an Enterprise license contains no such limitation. The
Exchange also believes that the proposed Digital Media Enterprise Fee
is equitable and reasonable because it is less than similar fees
charged by other exchanges.\29\
---------------------------------------------------------------------------

\29\ Nasdaq offers proprietary data products for distribution
over the internet and television under alternative fee schedules
that are subject to maximum fee of $50,000 [sic] per month. See
Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise fee
of $40,000 per month for the NYSE Trade Digital Media product. See
Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR
20983 (April 8, 2013) (SR-NYSE-2013-23).
---------------------------------------------------------------------------

BZX Depth
User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for BZX Depth are equitable and
reasonable because they will result in greater availability to
Professional and Non-Professional Users. Moreover, introducing a modest
Non-Professional User fee for BZX Depth is reasonable because it
provides an additional method for retail investors to access BZX Depth
data by providing the same data that is available to Professional
Users. The Exchange believes that the proposed fees are equitable and
not unfairly discriminatory because they will be charged uniformly to
recipient firms and Users. The fee structure of differentiated
Professional and Non-Professional fees is utilized by the Exchange and
has long been used by other exchanges for their proprietary data
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to
reduce the price of data to retail investors and make it more broadly
available.\30\ Offering BZX Depth to Non-Professional Users with the
same data available to Professional Users results in greater equity
among data recipients. The Exchange also believes it is equitable,
reasonable, and not unfairly discriminatory to charge User fees to
Internal Distributors, as such fees are currently charged by NYSE and
Nasdaq.\31\
---------------------------------------------------------------------------

\30\ See supra note 24.
\31\ See supra notes 24 and 25 (not limiting the application of
user fees to external distribution only).
---------------------------------------------------------------------------

In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE and Nasdaq.
Specifically, NYSE offers NYSE OpenBook Ultra for a monthly fee of
$60.00 per professional subscriber and $15 per non-professional
subscriber.\32\ Nasdaq offers Nasdaq TotalView-ITCH for a monthly fee
of $70.00 per professional subscriber and $14 per non-professional
subscriber.\33\ The Exchange's proposed per User Fees for BZX Depth are
less than the NYSE and Nasdaq fees.
---------------------------------------------------------------------------

\32\ See supra note 25.
\33\ See supra note 26.
---------------------------------------------------------------------------

Enterprise Fee. The proposed Enterprise Fee for BZX Depth is
equitable and reasonable as compared to the enterprise fees currently
charged for Nasdaq TotalView-ITCH. Nasdaq charges an enterprise fee of
$100,000 per month for Nasdaq TotalView-ITCH,\34\ which is equal to the
proposed Enterprise Fee of $100,000 per month for BZX Depth. In
addition, the Enterprise Fee proposed by the Exchange could result in a
fee reduction for recipient firms with a large number of Professional
and Non-Professional Users. If a recipient firm has a smaller number of
Professional Users of BZX Depth, then it may continue using the per
User structure and benefit from the per User Fee reductions. By
reducing prices for recipient firms with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute BZX Depth, thereby expanding the
distribution of this market data for the benefit of investors.
---------------------------------------------------------------------------

\34\ See supra note 27.
---------------------------------------------------------------------------

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

The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange's ability to price BZX Depth and BZX Summary Depth is
constrained by: (i) competition among exchanges, other trading
platforms, and Trade Reporting Facilities (``TRF'') that compete with
each other in a variety of dimensions; (ii) the existence of
inexpensive real-time consolidated data and market-specific data and
free delayed data; and (iii) the inherent contestability of the market
for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
In addition, BZX Summary Depth and BZX Depth compete with a number
of alternative products. For instance, BZX Summary Depth and BZX Depth
do provide a complete picture of all trading activity in a security.
Rather, the other national securities exchanges, the several TRFs of
FINRA, and Electronic Communication Networks (``ECN'') that produce
proprietary data all produce trades and trade reports. Each is
currently permitted to produce last sale information products, and many
currently do, including Nasdaq and NYSE. In addition, market
participants can gain access to BZX last sale and depth-of-book
quotations, though integrated with the prices of other markets, on
feeds made available through the SIPs.

[[Page 95698]]

In sum, the availability of a variety of alternative sources of
information imposes significant competitive pressures on Exchange data
products and the Exchange's compelling need to attract order flow
imposes significant competitive pressure on the Exchange to act
equitably, fairly, and reasonably in setting the proposed data product
fees. The proposed data product fees are, in part, responses to that
pressure. The Exchange believes that the proposed fees would reflect an
equitable allocation of its overall costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish fair, reasonable, and not
unreasonably discriminatory fees and an equitable allocation of fees
among all Users. The existence of alternatives to BZX Depth and BZX
Summary Depth, including existing similar feeds by other exchanges,
consolidated data, and proprietary data from other sources, ensures
that the Exchange cannot set unreasonable fees, or fees that are
unreasonably discriminatory, when vendors and subscribers can elect
these alternatives or choose not to purchase a specific proprietary
data product if its cost to purchase is not justified by the returns
any particular vendor or subscriber would achieve through the purchase.
Lastly, the Exchange represents that the increase in pricing of BZX
Depth and the proposed pricing of the BZX Summary Feed would continue
to enable a competing vendor to create a competing product to the
Exchange's Bats One Feed on the same price and latency basis as the
Exchange. The Bats One Feed is a data feed that disseminates, on a
real-time basis, the aggregate BBO of all displayed orders for
securities traded on each of the Bats Exchanges and for the Bats
Exchanges report quotes under the CTA Plan or the Nasdaq/UTP Plan. The
Bats One Feed also contains the individual last sale information for
the Bats Exchanges (collectively with the aggregate BBO, the ``Bats One
Summary Feed''). In addition, the Bats One Feed contains optional
functionality which enables recipients to receive aggregated two-sided
quotations from the Bats Exchanges for up to five (5) price levels
(``Bats One Premium Feed'').\35\ The Exchange uses the following data
feeds to create the Bats One Feed, each of which are available to
vendors: EDGX Depth, EDGA Depth, BYX Depth, and the BZX Depth.
---------------------------------------------------------------------------

\35\ See Exchange Rule 11.22(i). See also Securities Exchange
Act Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31,
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055;
SR-BYX-2014-030) (Notice of Amendments No. 2 and Order Granting
Accelerated Approval to Proposed Rule Changes, as Modified by
Amendments Nos. 1 and 2, to Establish a New Market Data Product
called the Bats One Feed) (``Bats One Approval Order'').
---------------------------------------------------------------------------

When adopting the Bats One Feed, the Exchange represented that a
vendor could create a competing product based in the data feed used to
construct the Bats One Feed on the same cost and latency basis as the
Exchange.\36\ Therefore, the Exchange designed the pricing of these
products so that their aggregate cost is not greater than the Bats One
Feed, thereby enabling a vendor to create a competing product to the
Bats One Feed on the same cost basis as the Exchange. However, the
Exchange now proposes to increase the cost of BZX Depth, which when
combined with the proposed increases by its affiliates for their depth
products, would cause their aggregate cost to be higher than the Bats
One Premium Feed.\37\ However, to ensure that a vendor could continue
to create a competing product to the Bats One Premium Feed at no
greater cost, that vendor could now utilize BZX Summary Depth, as well
as the Summary Depth feeds of BYX, EDGA, and EDGX to create a competing
product to the Bats One Premium Feed for less cost and on the same
latency basis as the Exchange.\38\ The Exchange has designed the
content and pricing of BZX Summary Depth, and related products by its
affiliates, so that a vendor could utilize those feeds, in lieu of the
Bats Exchange's existing depth-of-book products, to construct a
competing product on the same cost and latency basis as the Exchange.
The pricing the Exchange and its affiliates propose to charge for
Summary Depth feeds would be lower than the cost to obtain the Bats One
Premium Feed.\39\ Such pricing would continue to enable a vendor to
receive each of the Bats Exchange's Summary Depth feeds and offer a
similar product to the Bats One Premium Feed on a competitive basis and
at no greater cost than the Exchange.
---------------------------------------------------------------------------

\36\ Id.
\37\ The Exchange notes that a vendor seeking to create a
product to compete with the Bats One Summary Feed may continue to
utilize each of the Bats Exchange's Top and Last Sale data feeds,
the aggregate cost of which is less than the Bats One Summary Feed.
\38\ While the proposed BZX Summary Depth feed does not contain
the symbol summary or consolidated volume data included in the Bats
One Feed, a vendor could include this information in a competing
product as this information is easily derivable from the proposed
feeds or can be obtained from the securities information processors
on the same terms as the Exchange.
\39\ While the aggregate cost of each of the Bats Exchange's
Summary Depth Products equals the cost of the Bats One Premium Feed,
the cost of the Bats One Feed continues to be greater because
subscribers are required to pay an additional $1,000 aggregation
fee. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

The Exchange has neither solicited nor received written comments on
the proposed rule change.

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 \40\ and paragraph (f) of Rule 19b-4
thereunder.\41\ 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.
---------------------------------------------------------------------------

\40\ 15 U.S.C. 78s(b)(3)(A).
\41\ 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
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-BatsBZX-2016-87 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-2016-87. 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

[[Page 95699]]

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-BatsBZX-2016-87 and should
be submitted on or before January 18, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

\42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31298 Filed 12-27-16; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 / Notices 95697

model that will allow investors more other exchanges for their proprietary proposed Enterprise Fee will not have to
choice in how they receive and view data products, and by the Nasdaq UTP report the number of Users on a
market data, all without having to and the CTA and CQ Plans in order to monthly basis as they currently do, but
account for and/or measure who reduce the price of data to retail rather will only have to count natural
accesses the data and how often they do investors and make it more broadly person users every six months, which is
so. available.30 Offering BZX Depth to Non- a significant reduction in administrative
The proposed Digital Media Professional Users with the same data burden. Finally, the Exchange believes
Enterprise Fee is equitable and available to Professional Users results in that it is equitable and not unfairly
reasonable because it will also enable greater equity among data recipients. discriminatory to establish an Enterprise
recipient firms to more widely The Exchange also believes it is Fee because it reduces the Exchange’s
distribute data from BZX Summary equitable, reasonable, and not unfairly costs and the Distributor’s
Depth to investors for informational discriminatory to charge User fees to administrative burdens in tracking and
purposes at a lower cost than is Internal Distributors, as such fees are auditing large numbers of Users.
available today. For example, a recipient currently charged by NYSE and
Nasdaq.31 B. Self-Regulatory Organization’s
firm may purchase an Enterprise license
In addition, the proposed fees are Statement on Burden on Competition
in the amount of $30,000 per month for
to receive BZX Summary Depth from an reasonable when compared to similar The Exchange does not believe that
External Distributor for an unlimited fees for comparable products offered by the proposed rule change will result in
number of Professional and Non- the NYSE and Nasdaq. Specifically, any burden on competition that is not
Professional Users, which is greater than NYSE offers NYSE OpenBook Ultra for necessary or appropriate in furtherance
the proposed Digital Media Enterprise a monthly fee of $60.00 per professional of the purposes of the Act, as amended.
Fee. The Exchange also believes the subscriber and $15 per non-professional The Exchange’s ability to price BZX
amount of the Digital Media Enterprise subscriber.32 Nasdaq offers Nasdaq Depth and BZX Summary Depth is
Fee is reasonable as compared to the TotalView-ITCH for a monthly fee of constrained by: (i) competition among
existing enterprise fees discussed above $70.00 per professional subscriber and exchanges, other trading platforms, and
because the distribution of BZX $14 per non-professional subscriber.33 Trade Reporting Facilities (‘‘TRF’’) that
Summary Depth data is limited to The Exchange’s proposed per User Fees compete with each other in a variety of
television, Web sites, and mobile for BZX Depth are less than the NYSE dimensions; (ii) the existence of
devices for informational purposes only, and Nasdaq fees. inexpensive real-time consolidated data
while distribution of BZX Summary Enterprise Fee. The proposed and market-specific data and free
Depth data pursuant to an Enterprise Enterprise Fee for BZX Depth is delayed data; and (iii) the inherent
license contains no such limitation. The equitable and reasonable as compared to contestability of the market for
the enterprise fees currently charged for
Exchange also believes that the proprietary data.
Nasdaq TotalView-ITCH. Nasdaq
proposed Digital Media Enterprise Fee The Exchange and its market data
charges an enterprise fee of $100,000
is equitable and reasonable because it is products are subject to significant
per month for Nasdaq TotalView-
less than similar fees charged by other competitive forces and the proposed
ITCH,34 which is equal to the proposed
exchanges.29 fees represent responses to that
Enterprise Fee of $100,000 per month
BZX Depth for BZX Depth. In addition, the competition. To start, the Exchange
Enterprise Fee proposed by the competes intensely for order flow. It
User Fees. The Exchange believes that competes with the other national
implementing the Professional and Non- Exchange could result in a fee reduction
for recipient firms with a large number securities exchanges that currently trade
Professional User fees for BZX Depth are equities, with electronic communication
of Professional and Non-Professional
equitable and reasonable because they networks, with quotes posted in
Users. If a recipient firm has a smaller
will result in greater availability to FINRA’s Alternative Display Facility,
number of Professional Users of BZX
Professional and Non-Professional with alternative trading systems, and
Depth, then it may continue using the
Users. Moreover, introducing a modest with securities firms that primarily
per User structure and benefit from the
Non-Professional User fee for BZX trade as principal with their customer
per User Fee reductions. By reducing
Depth is reasonable because it provides order flow.
prices for recipient firms with a large
an additional method for retail investors In addition, BZX Summary Depth and
number of Professional and Non-
to access BZX Depth data by providing BZX Depth compete with a number of
Professional Users, the Exchange
the same data that is available to alternative products. For instance, BZX
believes that more firms may choose to
Professional Users. The Exchange receive and to distribute BZX Depth, Summary Depth and BZX Depth do
believes that the proposed fees are thereby expanding the distribution of provide a complete picture of all trading
equitable and not unfairly this market data for the benefit of activity in a security. Rather, the other
discriminatory because they will be investors. national securities exchanges, the
charged uniformly to recipient firms The Exchange further believes that the several TRFs of FINRA, and Electronic
and Users. The fee structure of proposed Enterprise Fee is reasonable Communication Networks (‘‘ECN’’) that
differentiated Professional and Non- because it will simplify reporting for produce proprietary data all produce
Professional fees is utilized by the certain recipients that have large trades and trade reports. Each is
Exchange and has long been used by numbers of Professional and Non- currently permitted to produce last sale
Professional Users. Firms that pay the information products, and many
sradovich on DSK3GMQ082PROD with NOTICES

29 Nasdaq offers proprietary data products for

distribution over the internet and television under
currently do, including Nasdaq and
alternative fee schedules that are subject to
30 See supra note 24. NYSE. In addition, market participants
31 See supra notes 24 and 25 (not limiting the
maximum fee of $50,000 [sic] per month. See can gain access to BZX last sale and
Nasdaq Rule 7039(b). The NYSE charges a Digit application of user fees to external distribution
only).
depth-of-book quotations, though
Media Enterprise fee of $40,000 per month for the
NYSE Trade Digital Media product. See Securities 32 See supra note 25. integrated with the prices of other
Exchange Act Release No. 69272 (April 2, 2013), 78 33 See supra note 26. markets, on feeds made available
FR 20983 (April 8, 2013) (SR–NYSE–2013–23). 34 See supra note 27. through the SIPs.

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Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 / Notices 95699

only one method. The Commission will ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with (‘‘Rule 611(b)(4)’’).4 In certain
post all comments on the Commission’s the Securities and Exchange circumstances as described herein, the
Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the Exchange proposes to no longer avail
rules/sro.shtml). Copies of the proposed rule change as described in itself of this exception to the Order
submission, all subsequent Items I, II, and III below, which Items Protection Rule.5 In those
amendments, all written statements have been prepared by the self- circumstances, rather than trading
with respect to the proposed rule regulatory organization. The through a protected quotation when the
change that are filed with the Commission is publishing this notice to PBBO is crossed, routable orders may
Commission, and all written solicit comments on the proposed rule instead be routed to protected
communications relating to the change from interested persons. quotations. In order to implement this
proposed rule change between the change, the Exchange proposes to
Commission and any person, other than I. Self-Regulatory Organization’s amend the following rules:
those that may be withheld from the Statement of the Terms of Substance of
the Proposed Rule Change Rule 13—Equities
public in accordance with the
provisions of 5 U.S.C. 552, will be The Exchange proposes to (1) change Market Order
available for Web site viewing and how orders would be processed when Rule 13(a)(1)—Equities provides that
printing in the Commission’s Public the protected best bid (‘‘PBB’’) is higher a Market Order that is eligible for
Reference Room, 100 F Street NE., than the protected best offer (‘‘PBO’’) automatic executions is an unpriced
Washington, DC 20549, on official (the ‘‘PBBO’’) in certain circumstances, order to buy or sell a stated amount of
business days between the hours of and (2) adopt a limit order price a security that is to be traded at the best
10:00 a.m. and 3:00 p.m. Copies of such protection mechanism. The proposed price obtainable without trading
filing also will be available for rule change is available on the through the NBBO. Rule 13(a)(1)(B)(i)—
inspection and copying at the principal Exchange’s Web site at www.nyse.com, Equities provides that when the
office of the Exchange. All comments at the principal office of the Exchange, Exchange is open for continuous
received will be posted without change; and at the Commission’s Public trading, a Market Order will be rejected
the Commission does not edit personal Reference Room. on arrival, or cancelled if resting, if
identifying information from there is no contra-side NBBO or if the
submissions. You should submit only II. Self-Regulatory Organization’s best protected quotations are or become
information that you wish to make Statement of the Purpose of, and crossed.
available publicly. All submissions Statutory Basis for, the Proposed Rule The Exchange proposes to no longer
should refer to File Number SR– Change reject or cancel Market Orders when the
BatsBZX–2016–87 and should be PBBO is crossed. To effectuate this
submitted on or before January 18, 2017. In its filing with the Commission, the
self-regulatory organization included change, the Exchange proposes to delete
For the Commission, by the Division of statements concerning the purpose of, the phrase ‘‘or if the best protected
Trading and Markets, pursuant to delegated
and basis for, the proposed rule change quotations are or become crossed’’ in
authority.42 Rule 13(a)(1)(B)(i)—Equities. As a result
and discussed any comments it received
Eduardo A. Aleman, of this proposed change, if a Market
on the proposed rule change. The text
Assistant Secretary. of those statements may be examined at Order arrives when the PBBO is crossed,
[FR Doc. 2016–31298 Filed 12–27–16; 8:45 am] the places specified in Item IV below. the Exchange would process the Market
BILLING CODE 8011–01–P The Exchange has prepared summaries, Order in the same way as when the
set forth in sections A, B, and C below, NBBO is crossed under the current
of the most significant parts of such rule.6
SECURITIES AND EXCHANGE statements. Routing to Protected Quotations
COMMISSION
A. Self-Regulatory Organization’s The Exchange proposes to amend the
[Release No. 34–79640; File No. SR– Rule 13—Equities to specify
NYSEMKT–2016–117]
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule circumstances when the Exchange
Self-Regulatory Organizations; NYSE Change would make order handling decisions
MKT LLC; Notice of Filing and based on a protected quotation. The
1. Purpose Exchange proposes to make these
Immediate Effectiveness of Proposed
Rule Change To (1) Change How The Exchange proposes to (1) change changes because, in the circumstances
Orders Would Be Processed When the how orders would be processed when described below, the Exchange would
Protected Best Bid (‘‘PBB’’) Is Higher the PBB is higher than the PBO in no longer avail itself of the exception to
Than the Protected Best Offer (‘‘PBO’’) certain circumstances, and (2) adopt a the Order Protection Rule specified in
(The ‘‘PBBO’’) in Certain limit order price protection mechanism. Rule 611(b)(4), and therefore the
Circumstances, and (2) Adopt a Limit Exchange would include protected
Processing of Orders When the PBBO Is
Order Price Protection Mechanism Crossed (Rules 13—Equities, 70— 4 17 CFR 242.611(b)(4). See also Rule 15A—

December 21, 2016. Equities, 76—Equities and 1000— Equities (Order Protection Rule).
Pursuant to Section 19(b)(1) 1 of the Equities) 5 For example, assume if the Exchange has a

displayed bid of $10.00 and another market crosses
Securities Exchange Act of 1934 (the Currently, when the PBB is priced that bid with a protected offer of $9.99. Currently,
sradovich on DSK3GMQ082PROD with NOTICES

‘‘Act’’) 2 and Rule 19b–4 thereunder,3 higher than the PBO in a security (i.e., if the Exchange receives a marketable order to buy,
notice is hereby given that on December the PBBO is crossed), buy and sell
it will trade on the Exchange at prices higher than
12, 2016, NYSE MKT LLC (the $9.99. Once the Exchange no longer avails itself of
orders trade on the Exchange without the exception in Rule 611(b)(4), unless otherwise
42 17
regard to price and without routing, specified in Exchange rules as described in this
CFR 200.30–3(a)(12). proposed rule change, arriving routable interest to
1 15 U.S.C.78s(b)(1).
consistent with the exception to the
buy that is marketable on the Exchange would
2 15 U.S.C. 78a. Order Protection Rule enumerated in instead first route to that protected offer.
3 17 CFR 240.19b–4. Rule 611(b)(4) of Regulation NMS 6 See Rule 13(a)(1)(B)(ii)—Equities.

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Document Created: 2016-12-28 02:17:13
Document Modified: 2016-12-28 02:17:13

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 95693