82 FR 22685 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 94 (May 17, 2017)

[Federal Register Volume 82, Number 94 (Wednesday, May 17, 2017)]
[Notices]
[Pages 22685-22687]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09923]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80653; File No. SR-BatsEDGA-2017-12]


Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change Related 
to Fees

May 11, 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 May 5, 2017, Bats EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to EDGA Rules 
15.1(a) and (c).
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to: (i) Lower the 
rate for fee code RT; and (ii) add the RMPT/RMPL Tier 2.
Fee Code RT
    The Exchange proposes to decrease the fee for orders yielding fee 
code RT, which is appended to orders routed using the ROUT \6\ routing 
strategy, from $0.00260 to $0.00250 per share for securities priced at 
or above $1.00 per share. The Exchange does not propose to amend the 
rate for orders yielding fee code RT in securities priced below $1.00 
per share.
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    \6\ ROUT is a routing strategy that checks the System for 
available shares and then are sent to destinations on the System 
routing table. See Exchange Rule 11.11(g)(3)(B). The term ``System 
routing table'' refers to the proprietary process for determining 
the specific trading venues to which the System routes orders and 
the order in which it routes them. See Exchange Rule 11.11(g).
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RMPT/RMPL Tier 2
    The Exchange offers one tier under footnote 4, the RMPT/RMPL Tier 
under which a Member receives a discounted fee of $0.0008 per share for 
orders yielding fee codes PT \7\ or PX \8\ where that Member adds or 
removes an ADV \9\ greater than or equal to 2,000,000 shares using the 
RMPT or RMPL \10\ routing strategy. The Exchange now proposes to add a 
new tier under footnote 4 to be known as Tier 2 under which a Member 
would receive a discounted fee of $0.0006 per share for orders yielding 
fee codes PT or PX where that Member adds or removes an ADV greater 
than or equal to 4,000,000 shares using the RMPT or RMPL routing 
strategy.\11\
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    \7\ Fee code PT is appended to orders that remove liquidity from 
the Exchange using RMPT or RMPL routing strategy and is assessed a 
fee of $0.0010 per share on securities priced over $1.00, and there 
is no fee on securities priced below $1.00. See the Exchange's fee 
schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
    \8\ Fee code PX is append to orders that are routed using the 
RMPL routing strategy to a destination not covered by Fee Code PL, 
or are routed using the RMPT routing strategy, and is assessed a fee 
of $0.0012 per share on securities priced over $1.00, and a fee of 
30% of the total dollar value on securities priced below $1.00. Id.
    \9\ ADV is generally defined as average daily volume calculated 
as the number of shares added to, removed from, or routed by, the 
Exchange, or any combination or subset thereof, per day. Id.
    \10\ The RMPT routing strategy operates similarly to RMPL in 
that under both Mid-Point Peg Orders check the System for available 
shares and any remaining shares are then sent to destinations on the 
System routing table that support midpoint eligible orders. If any 
shares remain unexecuted after routing, they are posted on the EDGA 
Book as a Mid-Point Peg Order, unless otherwise instructed by the 
User. While RMPL and RMPT operate in an identical manner, the 
trading venues that each routing strategy routes to and the order in 
which it routes them differ. See Exchange Rule 11.11(g)(13).
    \11\ As a result of the fee schedule layout change in adding a 
second tier, the description of which fee codes are appended with 
footnote 3 will be moved above the table similar to the layout of 
the table in footnote 4.

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[[Page 22686]]

Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule immediately.\12\
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    \12\ The Exchange initially submitted the proposed fee change on 
May 1, 2017. (SR-BatsEDGA-2017-09). On May 5, 2017, the Exchange 
withdrew SR-BatsEDGA-2017-09 and submitted this filing.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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Fee Code RT
    The Exchange believes that its proposal to decrease the fee for 
orders that yield fee code RT represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities in that it continues to be designed to 
cover the costs of routing incurred by the Exchange. The Exchange 
believes the decreased fee will attract additional liquidity to the 
Exchange as orders routed using the ROUT routing strategy first check 
the Exchange for available shares before routing and any unexecuted 
returned shares are posted to the Exchange. While the affected Members' 
orders will be charged a lower fee due to the proposal, the revenue 
received by the Exchange will continue to be used to fund the Exchange 
generally, including the cost of maintaining and improving the 
technology used to handle and route orders from the Exchange as well as 
programs that the Exchange believes help to attract additional 
liquidity and thus improve the depth of liquidity available on the 
Exchange. Furthermore, the Exchange notes that routing through the 
Exchange is voluntary. Lastly, the Exchange also believes that the 
proposed amendment is non-discriminatory because it applies uniformly 
to all Members.
RMPT/RMPL Tier 2
    The Exchange believe that the addition of the RMPL/RMPT Tier 2 is 
also reasonable and equitable because it is similar to the RMPL/RMPT 
Tier 1 and its inclusion of the RMPL and RMPT routing strategies 
results in the equal treatment of those orders under the Exchange's 
tiered pricing structure. The proposed new RMPT/RMPL Tier 2 should also 
attract additional midpoint liquidity to the Exchange, resulting in 
increased price improvement opportunities for orders seeking an 
execution at the midpoint of the NBBO on the Exchange or elsewhere.
    In addition, volume-based rebates such as that proposed herein have 
been widely adopted by exchanges and are equitable because they are 
open to all Members on an equal basis and provide additional benefits 
or discounts that are reasonably related to: (i) the value to an 
exchange's market quality; (ii) associated higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns; and (iii) the introduction of higher volumes of orders into 
the price and volume discovery processes. The Exchange believes that 
the proposed tier is a reasonable, fair and equitable, and not an 
unfairly discriminatory allocation of fees and rebates, because it will 
provide Members with an additional incentive to reach certain 
thresholds on the Exchange.

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

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that this change represents a 
significant departure from previous pricing offered by the Exchange or 
from pricing offered by the Exchange's competitors. The proposed rates 
would apply uniformly to all Members, and Members may opt to disfavor 
the Exchange's pricing if they believe that alternatives offer them 
better value. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. 
Further, excessive fees would serve to impair an exchange's ability to 
compete for order flow and members rather than burdening competition. 
The Exchange believes that its proposal would not burden intramarket 
competition because the proposed rate would apply uniformly to all 
Members.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \15\ and paragraph (f) of Rule 19b-4 
thereunder.\16\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BatsEDGA-2017-12 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-BatsEDGA-2017-12. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for

[[Page 22687]]

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-BatsEDGA-2017-12, and should be 
submitted on or before June 7, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09923 Filed 5-16-17; 8:45 am]
BILLING CODE 8011-01-P