82 FR 10102 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Type of Logical Port Known as a Purge Port

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 26 (February 9, 2017)

Page Range		10102-10105
FR Document		2017-02638
Federal Register, Volume 82 Issue 26 (Thursday, February 9, 2017)
[Federal Register Volume 82, Number 26 (Thursday, February 9, 2017)]
[Notices]
[Pages 10102-10105]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02638]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79956; File No. SR-BatsBZX-2017-05]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a 
New Type of Logical Port Known as a Purge Port

February 3, 2017.
    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 January 23, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it 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).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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 Exchange Rule 22.11, Mass 
Cancellation of Trading Interest, to reflect the proposed Purge Port 
functionality.
    The text of the proposed changes to Exchange Rule 22.11 is attached 
as Exhibit 5A. The proposed changes to the fee schedule are attached as 
Exhibit 5B. The text of the proposed rule change is available at the 
Exchange's Web site at www.bats.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 also offers a bulk-quoting interface which allows 
Users of BZX Options to submit and update multiple bids and offers in 
one message through logical ports enabled for bulk-quoting.
Purge Ports
    The Exchange now proposes to modify the BZX Options fee schedule to 
identify fees for Purge Ports, a new type of logical port which would 
enable Options Members \5\ to cancel/purge all open orders, or a subset 
thereof, across multiple logical ports through a single cancel/purge 
message. The Exchange also proposes to amend Exchange Rule 22.11, Mass 
Cancellation of Trading Interest, to reflect the proposed Purge Port 
functionality. The proposed ports are designed to assist Options 
Members, including Market Makers, in the management of, and risk 
control over, their quotes, particularly if the Options Member is 
dealing with a large number of options. For example, if an Options 
Member detects market indications that may influence the direction or 
bias of

[[Page 10103]]

his or her quotes the Options Member may use the proposed Purge Port(s) 
to reduce uncertainty and to manage risk by purging all quotes in a 
number of options seamlessly to avoid unintended executions, while 
continuing to evaluate the direction of the market. While Purge Ports 
will be available to all Options Members, the Exchange anticipates they 
will be used primarily by Market Makers.
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    \5\ ``Options Member'' is defined as ``a firm, or organization 
that is registered with the Exchange pursuant to Chapter XVII of 
these Rules for purposes of participating in options trading on EDGX 
Options as an `Options Order Entry Firm' or `Options Market Maker.' 
'' See Exchange Rule 16.1(a)(38).
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    Options Members may currently cancel orders through their existing 
logical ports and may send a mass cancel message pertaining to multiple 
contracts cancelling all orders sent though a particular logical port. 
The Exchange now proposes to expand the ability of Options Members to 
cancel orders through the proposed Purge Ports, which would enable them 
to cancel/purge all open orders, or a subset thereof, across multiple 
logical ports through a single cancel/purge message. The mass cancel 
request may be limited to a subset of orders by identifying the range 
of orders to be purged.\6\ An Options Member may also request via a 
Purge Port that the Exchange block all or a subset of its new inbound 
bids, offers, and orders in all series of options or in all options for 
a specified underlying security. The block will remain in effect until 
the Options Member requests the Exchange remove the block. The Exchange 
proposes to modify the Options Logical Port Fee section of the BZX 
Options fee schedule to adopt a fee for Purge Ports of $750 per port/
per month.
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    \6\ The Options Member may identify a subset of orders based on 
their own risk profile by selecting orders across series, strike 
price, and/or expiration date.
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    The Exchange also proposes to amend Exchange Rule 22.11, Mass 
Cancellation of Trading Interest, to reflect the proposed Purge Port 
functionality. Exchange Rule 22.11 currently states that an Options 
Member may simultaneously cancel all its bids, offers, and orders in 
all series of options or in all options for a specified underlying 
security by requesting the Exchange staff to effect such cancellation. 
First, the Exchange proposes to amend Rule 22.11 to state that an 
Options Member may also cancel all or a subset of its bids, offers, and 
orders in all series of options or in all options for a specified 
underlying security by requesting the Exchange to effect such 
cancellation.\7\ The Exchange further proposes to amend Rule 22.11 to 
state that an Options Member may also request that the Exchange block 
all or a subset of its new inbound bids, offers, and orders in all 
series of options or in all options for a specified underlying 
security. Rule 22.11 will further state that the block will remain in 
effect until the Options Member requests the Exchange remove the block.
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    \7\ The Exchange also proposes to the remove reference to the 
Exchange ``staff'' as such cancellation request may also be through 
the logical ports or the proposed Purge Ports.
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Ministerial Change
    The Exchange proposes to remove language from the Option Logical 
Port Fees section of its fee schedule regarding the summing of logical 
ports for billing purposes. The fee schedule currently states that the, 
``[e]xcept for bulk quoting ports, which will be separately evaluated, 
BZX Options will sum logical ports across all classifications in order 
to determine applicable fees.'' This language was adopted in October 
2015 when the Exchange began charging different rates based on the 
number of logical ports a User utilized.\8\ Thereafter, in June 2016, 
the Exchange proposed to no longer charge different rates based on the 
number of logical ports and moved to a single rate for all logical 
ports, but for ports with bulk quoting capabilities.\9\ At that time, 
the above language should have also been removed from the fee schedule 
and the Exchange now proposes to remove it in this filing as such 
language is no longer necessary.
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    \8\ See Securities Exchange Act Release No. 76120 (October 9, 
2015), 80 FR 62588 (October 16, 2015) (SR-BATS-2015-83).
    \9\ See Securities Exchange Act Release No. 77884 (May 23, 
2016), 81 FR 33718 (May 27, 2016) (SR-BatsBZX-2016-17).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. The Exchange believes that 
the proposed rule change is consistent with Section 6(b)(4) of the 
Act,\12\ in that it provides for the equitable allocation of reasonable 
dues, fees and other charges among Members and other persons using any 
facility or system which the Exchange operates or controls. The 
Exchange believes that the proposed rule change would promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market because offering Options Members, 
including Market Makers, designated Purge Ports would enhance their 
ability to manage quotes, quote traffic, and their quoting 
obligations,\13\ which would, in turn, improve their risk controls to 
the benefit of all market participants. The Exchange believes that the 
Purge Ports would foster cooperation and coordination with persons 
engaged in facilitating transactions in securities because designating 
Purge Ports for purges only may encourage better use of such dedicated 
ports. This may, concurrent with the logical ports that carry quote and 
other information necessary for market making activities, enable more 
efficient, as well as fair and reasonable, use of Market Makers' 
resources. Because Purge Ports, as the name suggests, are only 
available for purging and not for activities such as order or quote 
entry, the Purge Ports are not designed to permit unfair discrimination 
but rather are designed to enable Market Makers to manage their quoting 
risk and meet their heightened quoting obligations that other market 
participants are not subject to, which, in turn, benefits all market 
participants. The Exchange also notes that similar connectivity and 
functionality is offered by other exchanges.\14\
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ See Exchange Rules 22.5 and 22.6.
    \14\ See Chapter VII of the NASDAQ PHLX LLC (``Phlx'') pricing 
schedule (setting forth fees for SQF Purge Ports, which only allow 
for the mass purging of quotations). See also Securities Exchange 
Act Release No. 77613 (April 13, 2016), 81 FR 23023 (April 19, 2016) 
(SR-Phlx-2016-45). See Miami International Securities Exchange LLC 
(``MIAX'') Rule 519C, Mass Cancellation of Trading Interest 
(allowing members to remove all or a subset of its quotations in and 
to block new inbound quotations). See also Securities Exchange Act 
Release No. 78974 (September 29, 2016), 81 FR 69090 (October 5, 
2016) (SR-MIAX-2016-34).
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    The Exchange notes that the proposed rule change will not relieve 
Market Makers of their continuous quoting obligations under Exchange 
Rule 22.6 and under Regulation NMS Rule 602.\15\ Specifically, any 
interest that is executable against an Options Member's or Market 
Maker's quotes and orders that is received by the Exchange prior to the 
time the removal of quotes request will automatically execute at that 
price, up to the quote's size. Market Makers that purge their quotes 
will not be relieved of the obligation to provide continuous two-sided 
quotes on a daily basis, nor will it prohibit the Exchange from taking 
disciplinary action against a Market Maker for failing to meet their

[[Page 10104]]

continuous quoting obligation each trading day.
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    \15\ 17 CFR 242.602.
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    The Exchange believes that its proposed fees should facilitate the 
ability of the Exchange to recoup some costs associated with Purge 
Ports as well as provide, maintain, and improve Purge Ports.\16\ The 
Exchange operates in a highly competitive market in which exchanges 
offer connectivity services as a means to facilitate the trading 
activities of Members and other participants. Accordingly, fees charged 
for connectivity are constrained by the active competition for the 
order flow of such participants as well as demand for market data from 
the Exchange. If a particular exchange charges excessive fees for 
connectivity, affected Members will opt to terminate their connectivity 
arrangements with that exchange, and adopt a possible range of 
alternative strategies, including routing to the applicable exchange 
through another participant or market center or taking that exchange's 
data indirectly. Accordingly, the exchange charging excessive fees 
would stand to lose not only connectivity revenues but also revenues 
associated with the execution of orders routed to it by affected 
Members, and, to the extent applicable, market data revenues. The 
Exchange believes that this competitive dynamic imposes powerful 
restraints on the ability of any exchange to charge unreasonable fees 
for connectivity.
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    \16\ Purge Ports will be fee liable on a monthly basis (and not 
only when such ports are active), which will help the Exchange to 
recoup the cost of these ports.
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    The Exchange also believes the proposed fee for the Purge Ports is 
equitable and reasonable as compared to the Exchange's other fees for 
logical port connectivity. The Exchange currently charges $650 per 
port/per month for logical ports, Multicast PITCH Spin Server, and GRP 
Ports. With regard to ports with bulk quoting capabilities, the 
Exchange charges $1,500 per month for the first five ports and $2,000 
per month for each port in excess of five. The Exchange believes it is 
equitable and reasonable to charge $750 per month for the proposed 
Purge Ports as such ports are more similar to ports with bulk quoting 
capabilities than to standard logical ports because both Purge Ports 
and bulk quoting ports allow for the sending of a single message to 
impact multiple orders. Additionally, Purge Port requests may cancel 
orders submitted over numerous ports and contain added functionality to 
purge only a subset of these orders. The proposed rate is competitive 
with that charged by competitor exchanges for similar functionality. 
For example, Phlx charges a rate of $500 per month for the first five 
SQF Purge Ports, which only allow for the mass purging of quotations 
and not the purging of a subset of orders and the blocking of new 
orders as proposed herein.\17\
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    \17\ See Chapter VII of the Phlx pricing schedule (setting forth 
fees for SQF Purge Ports). See also Securities Exchange Act Release 
No. 77613 (April 13, 2016), 81 FR 23023 (April 19, 2016) (SR-Phlx-
2016-45).
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    The Exchange also believes that the proposed amendments to its fee 
schedule are non-discriminatory because they will apply uniformly to 
all Members. The proposed Purge Ports are completely voluntary and no 
Member is required or under any regulatory obligation to utilize them. 
All Members that voluntarily select this service options will be 
charged the same amount for the same services. All Members have the 
option to select any connectivity option, and there is no 
differentiation among Members with regard to the fees charged for the 
services offered by the Exchange.
    Lastly, the Exchange believes the ministerial change to its fee 
schedule is also equitable, reasonable and not unfairly discriminatory 
in that it removes unnecessary language to avoid potential investor 
confusion.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed amendments to its fee schedule 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. On the contrary, 
the Exchange believes the proposed rule change will enhance competition 
because it will enable it to offer similar connectivity and 
functionality as its competitor exchanges.\18\ In addition, the 
proposed Purge Ports are completely voluntary and no Member is required 
or under any regulatory obligation to utilize them. 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.
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    \18\ See supra note 14.
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    The Exchange believes that fees for the proposed Purge Ports and 
connectivity, in general, are constrained by the robust competition for 
order flow among exchanges and non-exchange markets. Further, excessive 
fees for connectivity, including Purge Port fees, would serve to impair 
an exchange's ability to compete for order flow rather than burdening 
competition. The Exchange also does not believe the proposed rule 
change would impact intramarket competition as it would apply to all 
Members and non-Members equally.
    Lastly, the ministerial change to its fee schedule will have no 
impact on competition as it does not change any fee or rate. It simply 
removes unnecessary language to avoid potential investor confusion.

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

    No comments were solicited or received on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, become operative for 30 days from the date on which it was 
filed or such shorter time as the Commission may designate it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \19\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\20\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4.
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    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: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) otherwise in furtherance of the purposes of the 
Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.

[[Page 10105]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal 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 No. SR-BatsBZX-2017-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-BatsBZX-2017-05. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also 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 No. SR-BatsBZX-2017-05 and should be 
submitted on or before March 2, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02638 Filed 2-8-17; 8:45 am]
 BILLING CODE 8011-01-P
10102 Federal Register / Vol. 82, No. 26 / Thursday, February 9, 2017 / Notices

unsolicited written comments from business days between the hours of reflect the proposed Purge Port
Members or other interested parties. 10:00 a.m. and 3:00 p.m. Copies of the functionality.
filing also will be available for The text of the proposed changes to
III. Date of Effectiveness of the Exchange Rule 22.11 is attached as
inspection and copying at the principal
Proposed Rule Change and Timing for Exhibit 5A. The proposed changes to the
office of the Exchange. All comments
Commission Action fee schedule are attached as Exhibit 5B.
received will be posted without change;
The foregoing rule change has become the Commission does not edit personal The text of the proposed rule change is
effective pursuant to Section 19(b)(3)(A) identifying information from available at the Exchange’s Web site at
of the Act 12 and paragraph (f) of Rule submissions. You should submit only www.bats.com, at the principal office of
19b–4 thereunder.13 At any time within information that you wish to make the Exchange, and at the Commission’s
60 days of the filing of the proposed rule available publicly. All submissions Public Reference Room.
change, the Commission summarily may should refer to File Number SR– II. Self-Regulatory Organization’s
temporarily suspend such rule change if BatsBYX–2017–04 and should be Statement of the Purpose of, and
it appears to the Commission that such submitted on or before March 2, 2017. Statutory Basis for, the Proposed Rule
action is necessary or appropriate in the For the Commission, by the Division of Change
public interest, for the protection of Trading and Markets, pursuant to delegated
investors, or otherwise in furtherance of authority.14
In its filing with the Commission, the
the purposes of the Act. Exchange included statements
Eduardo A. Aleman,
concerning the purpose of and basis for
IV. Solicitation of Comments Assistant Secretary.
the proposed rule change and discussed
[FR Doc. 2017–02647 Filed 2–8–17; 8:45 am] any comments it received on the
Interested persons are invited to
submit written data, views, and BILLING CODE 8011–01–P proposed rule change. The text of these
arguments concerning the foregoing, statements may be examined at the
including whether the proposed rule places specified in Item IV below. The
SECURITIES AND EXCHANGE Exchange has prepared summaries, set
change is consistent with the Act.
COMMISSION forth in Sections A, B, and C below, of
Comments may be submitted by any of
the following methods: [Release No. 34–79956; File No. SR– the most significant parts of such
BatsBZX–2017–05] statements.
Electronic Comments
(A) Self-Regulatory Organization’s
• Use the Commission’s Internet Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing Statement of the Purpose of, and
comment form (http://www.sec.gov/
and Immediate Effectiveness of a Statutory Basis for, the Proposed Rule
rules/sro.shtml); or
Change
• Send an email to rule-comments@ Proposed Rule Change To Adopt a
sec.gov. Please include File Number SR– New Type of Logical Port Known as a 1. Purpose
BatsBYX–2017–04 on the subject line. Purge Port
The Exchange also offers a bulk-
Paper Comments February 3, 2017. quoting interface which allows Users of
Pursuant to Section 19(b)(1) of the BZX Options to submit and update
• Send paper comments in triplicate
Securities Exchange Act of 1934 (the multiple bids and offers in one message
to Secretary, Securities and Exchange
‘‘Act’’),1 and Rule 19b–4 thereunder,2 through logical ports enabled for bulk-
Commission, 100 F Street NE.,
notice is hereby given that on January quoting.
Washington, DC 20549–1090.
23, 2017, Bats BZX Exchange, Inc. (the Purge Ports
All submissions should refer to File
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Number SR–BatsBYX–2017–04. This The Exchange now proposes to
Securities and Exchange Commission
file number should be included on the modify the BZX Options fee schedule to
(‘‘Commission’’) the proposed rule
subject line if email is used. To help the identify fees for Purge Ports, a new type
change as described in Items I and II
Commission process and review your of logical port which would enable
below, which Items have been prepared
comments more efficiently, please use Options Members 5 to cancel/purge all
by the Exchange. The Exchange has
only one method. The Commission will open orders, or a subset thereof, across
designated this proposal as a ‘‘non-
post all comments on the Commission’s multiple logical ports through a single
controversial’’ proposed rule change
Internet Web site (http://www.sec.gov/ cancel/purge message. The Exchange
pursuant to Section 19(b)(3)(A) of the
rules/sro.shtml). Copies of the also proposes to amend Exchange Rule
Act 3 and Rule 19b–4(f)(6)(iii)
submission, all subsequent 22.11, Mass Cancellation of Trading
thereunder,4 which renders it effective
amendments, all written statements Interest, to reflect the proposed Purge
upon filing with the Commission. The
with respect to the proposed rule Port functionality. The proposed ports
Commission is publishing this notice to
change that are filed with the are designed to assist Options Members,
solicit comments on the proposed rule
Commission, and all written including Market Makers, in the
change from interested persons.
communications relating to the management of, and risk control over,
proposed rule change between the I. Self-Regulatory Organization’s their quotes, particularly if the Options
Commission and any person, other than Statement of the Terms of Substance of Member is dealing with a large number
those that may be withheld from the the Proposed Rule Change of options. For example, if an Options
public in accordance with the The Exchange filed a proposal to Member detects market indications that
sradovich on DSK3GMQ082PROD with NOTICES

provisions of 5 U.S.C. 552, will be amend Exchange Rule 22.11, Mass may influence the direction or bias of
available for Web site viewing and Cancellation of Trading Interest, to
printing in the Commission’s Public 5 ‘‘Options Member’’ is defined as ‘‘a firm, or

Reference Room, 100 F Street NE., 14 17 organization that is registered with the Exchange
CFR 200.30–3(a)(12).
pursuant to Chapter XVII of these Rules for
Washington, DC 20549, on official 1 15 U.S.C. 78s(b)(1).
purposes of participating in options trading on
2 17 CFR 240.19b–4.
EDGX Options as an ‘Options Order Entry Firm’ or
12 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A).
‘Options Market Maker.’ ’’ See Exchange Rule
13 17 CFR 240.19b–4(f). 4 17 CFR 240.19b–4(f)(6)(iii). 16.1(a)(38).

VerDate Sep<11>2014 18:11 Feb 08, 2017 Jkt 241001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\09FEN1.SGM 09FEN1
10104 Federal Register / Vol. 82, No. 26 / Thursday, February 9, 2017 / Notices

continuous quoting obligation each similar functionality. For example, Phlx by the robust competition for order flow
trading day. charges a rate of $500 per month for the among exchanges and non-exchange
The Exchange believes that its first five SQF Purge Ports, which only markets. Further, excessive fees for
proposed fees should facilitate the allow for the mass purging of quotations connectivity, including Purge Port fees,
ability of the Exchange to recoup some and not the purging of a subset of orders would serve to impair an exchange’s
costs associated with Purge Ports as well and the blocking of new orders as ability to compete for order flow rather
as provide, maintain, and improve proposed herein.17 than burdening competition. The
Purge Ports.16 The Exchange operates in The Exchange also believes that the Exchange also does not believe the
a highly competitive market in which proposed amendments to its fee proposed rule change would impact
exchanges offer connectivity services as schedule are non-discriminatory intramarket competition as it would
a means to facilitate the trading because they will apply uniformly to all apply to all Members and non-Members
activities of Members and other Members. The proposed Purge Ports are equally.
participants. Accordingly, fees charged completely voluntary and no Member is
Lastly, the ministerial change to its
for connectivity are constrained by the required or under any regulatory
fee schedule will have no impact on
active competition for the order flow of obligation to utilize them. All Members
competition as it does not change any
such participants as well as demand for that voluntarily select this service
fee or rate. It simply removes
market data from the Exchange. If a options will be charged the same
amount for the same services. All unnecessary language to avoid potential
particular exchange charges excessive investor confusion.
fees for connectivity, affected Members Members have the option to select any
will opt to terminate their connectivity connectivity option, and there is no (C) Self-Regulatory Organization’s
arrangements with that exchange, and differentiation among Members with Statement on Comments on the
adopt a possible range of alternative regard to the fees charged for the Proposed Rule Change Received From
strategies, including routing to the services offered by the Exchange. Members, Participants or Others
applicable exchange through another Lastly, the Exchange believes the
participant or market center or taking ministerial change to its fee schedule is No comments were solicited or
that exchange’s data indirectly. also equitable, reasonable and not received on the proposed rule change.
Accordingly, the exchange charging unfairly discriminatory in that it
removes unnecessary language to avoid III. Date of Effectiveness of the
excessive fees would stand to lose not Proposed Rule Change and Timing for
only connectivity revenues but also potential investor confusion.
Commission Action
revenues associated with the execution (B) Self-Regulatory Organization’s
of orders routed to it by affected Statement on Burden on Competition Because the foregoing proposed rule
Members, and, to the extent applicable, change does not: (A) Significantly affect
The Exchange believes its proposed
market data revenues. The Exchange the protection of investors or the public
amendments to its fee schedule would
believes that this competitive dynamic interest; (B) impose any significant
not impose any burden on competition
imposes powerful restraints on the burden on competition; and (C) by its
that is not necessary or appropriate in
ability of any exchange to charge terms, become operative for 30 days
furtherance of the purposes of the Act.
unreasonable fees for connectivity. On the contrary, the Exchange believes from the date on which it was filed or
The Exchange also believes the such shorter time as the Commission
the proposed rule change will enhance
proposed fee for the Purge Ports is may designate it has become effective
competition because it will enable it to
equitable and reasonable as compared to offer similar connectivity and pursuant to Section 19(b)(3)(A) of the
the Exchange’s other fees for logical port functionality as its competitor Act 19 and paragraph (f)(6) of Rule 19b–
connectivity. The Exchange currently exchanges.18 In addition, the proposed 4 thereunder,20 the Exchange has
charges $650 per port/per month for Purge Ports are completely voluntary designated this rule filing as non-
logical ports, Multicast PITCH Spin and no Member is required or under any controversial. The Exchange has given
Server, and GRP Ports. With regard to regulatory obligation to utilize them. the Commission written notice of its
ports with bulk quoting capabilities, the The Exchange does not believe that the intent to file the proposed rule change,
Exchange charges $1,500 per month for proposed change represents a significant along with a brief description and text
the first five ports and $2,000 per month departure from previous pricing offered of the proposed rule change at least five
for each port in excess of five. The by the Exchange or pricing offered by business days prior to the date of filing
Exchange believes it is equitable and the Exchange’s competitors. of the proposed rule change, or such
reasonable to charge $750 per month for Additionally, Members may opt to shorter time as designated by the
the proposed Purge Ports as such ports disfavor the Exchange’s pricing if they Commission.
are more similar to ports with bulk believe that alternatives offer them At any time within 60 days of the
quoting capabilities than to standard better value. Accordingly, the Exchange filing of the proposed rule change, the
logical ports because both Purge Ports does not believe that the proposed Commission summarily may
and bulk quoting ports allow for the change will impair the ability of temporarily suspend such rule change if
sending of a single message to impact Members or competing venues to it appears to the Commission that such
multiple orders. Additionally, Purge maintain their competitive standing in action is: (1) Necessary or appropriate in
Port requests may cancel orders the financial markets. the public interest; (2) for the protection
submitted over numerous ports and The Exchange believes that fees for of investors; or (3) otherwise in
contain added functionality to purge the proposed Purge Ports and furtherance of the purposes of the Act.
sradovich on DSK3GMQ082PROD with NOTICES

only a subset of these orders. The connectivity, in general, are constrained If the Commission takes such action, the
proposed rate is competitive with that Commission shall institute proceedings
charged by competitor exchanges for 17 See Chapter VII of the Phlx pricing schedule
to determine whether the proposed rule
(setting forth fees for SQF Purge Ports). See also should be approved or disapproved.
16 Purge Ports will be fee liable on a monthly Securities Exchange Act Release No. 77613 (April
basis (and not only when such ports are active), 13, 2016), 81 FR 23023 (April 19, 2016) (SR–Phlx–
which will help the Exchange to recoup the cost of 2016–45). 19 15 U.S.C. 78s(b)(3)(A).
these ports. 18 See supra note 14. 20 17 CFR 240.19b–4.

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Federal Register / Vol. 82, No. 26 / Thursday, February 9, 2017 / Notices 10105

IV. Solicitation of Comments For the Commission, by the Division of forth in sections A, B, and C below, of
Trading and Markets, pursuant to delegated the most significant aspects of such
Interested persons are invited to authority.21 statements.
submit written data, views and Eduardo A. Aleman,
arguments concerning the foregoing, Assistant Secretary. A. Self-Regulatory Organization’s
including whether the proposal is [FR Doc. 2017–02638 Filed 2–8–17; 8:45 am]
Statement of the Purpose of, and
consistent with the Act. Comments may Statutory Basis for, the Proposed Rule
BILLING CODE 8011–01–P
be submitted by any of the following Change
methods: 1. Purpose
SECURITIES AND EXCHANGE
Electronic Comments COMMISSION Bats BYX Exchange, Inc., Bats BZX
• Use the Commission’s Internet [Release No. 34–79967; File No. SR–ISE–
Exchange, Inc., Bats EDGA Exchange,
comment form (http://www.sec.gov/ 2017–08] Inc., Bats EDGX Exchange, Inc., BOX
rules/sro.shtml); or Options Exchange LLC, C2 Options
Self-Regulatory Organizations; Exchange, Incorporated, Chicago Board
• Send an email to rule-comments@ International Securities Exchange, Options Exchange, Incorporated,
sec.gov. Please include File No. SR– LLC; Notice of Filing of Proposed Rule Chicago Stock Exchange, Inc., Financial
BatsBZX–2017–05 on the subject line. Change To Adopt Chapter 9 Industry Regulatory Authority, Inc.,
Paper Comments International Securities Exchange, LLC,
February 3, 2017. Investors’ Exchange LLC, ISE Gemini,
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the LLC, ISE Mercury, LLC, Miami
to Secretary, Securities and Exchange Securities Exchange Act of 1934 International Securities Exchange LLC,
Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2 MIAX PEARL, LLC, NASDAQ BX, Inc.,
Washington, DC 20549–1090. notice is hereby given that on February NASDAQ PHLX LLC, The NASDAQ
2, 2017, the International Securities Stock Market LLC, National Stock
All submissions should refer to File No. Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) Exchange, Inc., New York Stock
SR–BatsBZX–2017–05. This file number filed with the Securities and Exchange Exchange LLC, NYSE MKT LLC, and
should be included on the subject line Commission (‘‘SEC’’ or ‘‘Commission’’) NYSE Arca, Inc. (collectively, the
if email is used. To help the the proposed rule change as described ‘‘Participants’’) filed with the
Commission process and review your in Items I, II, and III, below, which Items Commission, pursuant to Section 11A of
comments more efficiently, please use have been prepared by the Exchange.3 the Exchange Act 4 and Rule 608 of
only one method. The Commission will The Commission is publishing this Regulation NMS thereunder,5 the CAT
post all comments on the Commission’s notice to solicit comments on the NMS Plan.6 The Participants filed the
Internet Web site (http://www.sec.gov/ proposed rule change from interested Plan to comply with Rule 613 of
rules/sro.shtml). Copies of the persons. Regulation NMS under the Exchange
submission, all subsequent I. Self-Regulatory Organization’s Act. The Plan was published for
amendments, all written statements Statement of the Terms of Substance of comment in the Federal Register on
with respect to the proposed rule the Proposed Rule Change May 17, 2016,7 and approved by the
change that are filed with the Commission, as modified, on November
The Exchange proposes to Adopt
Commission, and all written 15, 2016.8
Chapter 9. The text of the proposed rule
communications relating to the change is available on the Exchange’s The Plan is designed to create,
proposed rule change between the Web site at www.ise.com, at the implement and maintain a consolidated
Commission and any person, other than principal office of the Exchange, and at audit trail (‘‘CAT’’) that would capture
those that may be withheld from the the Commission’s Public Reference customer and order event information
public in accordance with the Room. for orders in NMS Securities and OTC
provisions of 5 U.S.C. 552, will be Equity Securities, across all markets,
available for Web site viewing and II. Self-Regulatory Organization’s from the time of order inception through
printing in the Commission’s Public Statement of the Purpose of, and routing, cancellation, modification, or
Statutory Basis for, the Proposed Rule execution in a single consolidated data
Reference Room, 100 F Street NE.,
Change source. Each Participant is required to
Washington, DC 20549, on official
business days between the hours of In its filing with the Commission, the enforce compliance by its Industry
10:00 a.m. and 3:00 p.m. Copies of such Exchange included statements Members, as applicable, with the
filing will also be available for concerning the purpose of and basis for provisions of the Plan, by adopting a
inspection and copying at the principal the proposed rule change and discussed Compliance Rule applicable to their
office of the Exchange. All comments any comments it received on the
received will be posted without change; proposed rule change. The text of these 4 15 U.S.C. 78k–1.
the Commission does not edit personal statements may be examined at the 5 17 CFR 242.608.
6 See Letter from the Participants to Brent J.
identifying information from places specified in Item IV below. The
Fields, Secretary, Commission, dated September 30,
Exchange has prepared summaries, set
submissions. You should submit only 2014; and Letter from Participants to Brent J. Fields,
information that you wish to make Secretary, Commission, dated February 27, 2015.
sradovich on DSK3GMQ082PROD with NOTICES

21 17 CFR 200.30–3(a)(12). On December 24, 2015, the Participants submitted
available publicly. All submissions 1 15 U.S.C. 78s(b)(1). an amendment to the CAT NMS Plan. See Letter
should refer to File No. SR–BatsBZX– 2 17 CFR 240.19b–4. from Participants to Brent J. Fields, Secretary,
2017–05 and should be submitted on or 3 The Exchange originally filed this proposed rule Commission, dated December 23, 2015.
7 Securities Exchange Act Rel. No. 77724 (Apr.
before March 2, 2017. change on January 17, 2017 under File No. SR–ISE–
2017–04. The Exchange withdrew that filing on 27, 2016), 81 FR 30614 (May 17, 2016).
January 31, 2017 and filed ISE–2017–05. The 8 Securities Exchange Act Rel. No. 79318 (Nov.

Exchange withdrew that filing on February 2, 15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
2017and filed this proposed rule change. Order’’).

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Document Created: 2017-02-09 01:02:45
Document Modified: 2017-02-09 01:02:45
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		82 FR 10102