82 FR 28920 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related To Amend Its Fee Schedule To Replace Current Inverted Pricing Model With Low Fee Model

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 121 (June 26, 2017)

Page Range		28920-28924
FR Document		2017-13228

Federal Register, Volume 82 Issue 121 (Monday, June 26, 2017)

[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28920-28924]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-13228]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80976; File No. SR-BatsEDGA-2017-18]

Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change Related
To Amend Its Fee Schedule To Replace Current Inverted Pricing Model
With Low Fee Model

June 20, 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 June 12, 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 and
II 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 its fee schedule to replace
its current inverted pricing model with a simple, low fee model.
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
Most exchanges today utilize maker-taker pricing under which they
provide a rebate to orders that add liquidity and charge a fee to
orders that remove liquidity. The Exchange currently incorporates an
inverse of that pricing model under which it charges a fee to add
liquidity and provides a rebate to remove liquidity. As described
below, the Exchange proposes to amend its fee schedule to replace its
current inverted

[[Page 28921]]

pricing model with a simple, low fee model.
The Exchange submits this proposal in response to the industry
feedback and the debate regarding exchange fee structures. Rule 610 of
Regulation NMS limits the fees that a Trading Center \5\ may charge for
accessing its Protected Quotation at $0.0030 per share.\6\ This fee cap
has served to create a cap on rebates with exchange's charging at or
near the access fee cap to remove liquidity and providing a rebate to
orders that add liquidity. Recent industry discourse has focused on fee
structures and their purported effect on liquidity provision, liquidity
taking, potential conflicts and order routing in the U.S. equity
market. In addition, the Commission's Equity Market Structure Advisory
Committee (``EMSAC'') recommended that the Commission propose a pilot
program to adjust the access fee cap under Rule 610 of Regulation NMS
to better understand these dynamics.\7\ In addition, some exchanges
have experimented with solutions, such as the recent pilot implemented
by the Nasdaq Stock Market LLC (``Nasdaq''), with limited success.
Other exchanges have proposed to not offer rebates and implemented a
low fee model \8\ as the Exchange proposes herein. The Exchange now
proposes to amend its fee schedule to no longer provide rebates and to
modify or eliminate other types of incentive pricing under its current
taker-maker pricing model. As amended, the Exchange would adopt a new
low fee pricing model under which it would charge a low fee or provide
the execution free of charge. The proposed low fee model is described
below.
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\5\ See 17 CR 242.600(b)(78).
\6\ See 17 CFR 242.610(c).
\7\ See EMSAC's Regulation NMS Subcommittee, Recommendation for
an Access Fee Pilot, June 10, 2016, available at https://www.sec.gov/spotlight/emsac/emsac-regulation-nms-recommendation-61016.pdf.
\8\ See the Investors Exchange, Inc. fee schedule available at
https://iextrading.com/trading/ (dated August 19, 2016).
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Displayed Order Fee Change
In securities priced at or above $1.00, the Exchange currently
charges a fee of $0.0005 per share for Displayed orders that add
liquidity and provides a rebate $0.0002 per share for Displayed orders
that remove liquidity. Receipt of this removal rebate is contingent on
the attributed Market Participant Identifier (``MPID'') adding
(including Non-Displayed \9\) and/or routing an ADV \10\ of at least
50,000 shares. Any attributed MPID not meeting this criteria is charged
$0.0030 per share for removing liquidity for securities priced $1.00
and over and 0.20% of dollar value for securities priced less than
$1.00. The Exchange now proposes to charge a fee of $0.00030 per share
to all Displayed \11\ orders in securities priced above $1.00,
regardless of whether they add or remove liquidity. The Exchange does
not propose any contingency requirements or conditions that Members
must satisfy to receive the proposed rates. Therefore, the Exchange
proposes to delete footnote 1 \12\ of the fee schedule as receipt of
the proposed fee would not be contingent on the MPID adding (including
Non-Displayed) and/or routing an ADV of at least 50,000 shares. All
Displayed orders in securities priced below $1.00 would continue to be
free and not be contingent to any minimum volume requirements.
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\9\ See Exchange Rule 11.6(e)(2).
\10\ ADV means 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. See the Exchange's fee
schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
\11\ See Exchange Rule 11.6(e)(1).
\12\ Due to the deletion of footnote 1, as well as the proposed
deletion of other footnotes described herein, the Exchange proposes
to renumber the remaining footnotes and corresponding reference to
those footnote throughout the fee schedule accordingly.
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As a result of the proposed change, the Exchange proposes to make
corresponding changes to the following fee codes for securities priced
at or above $1.00:
Fee code 3, which is appended to orders that add liquidity
on the Exchange in Tape A and C securities outside of Regular Trading
Hours,\13\ are currently charged a fee of $0.00050 per share. Orders
that yield fee code B would now be charged the proposed standard fee of
$0.00030 per share.
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\13\ Regular Trading Hours is defined as ``the time between 9:30
a.m. and 4:00 p.m. Eastern Time.'' See Exchange Rule 1.5(y).
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Fee code 4, which is appended to orders that add liquidity
on the Exchange in Tape B securities outside of Regular Trading Hours,
are currently charged a fee of $0.00050 per share. Orders that yield
fee code 4 would now be charged the proposed standard fee of $0.00030
per share.
Fee code 6, which is appended to orders that remove
liquidity from the Exchange in all securities outside of Regular
Trading Hours, are currently provided a rebate of $0.00020 per share.
Orders that yield fee code 6 would now be charged the proposed standard
fee of $0.00030 per share.
Fee code B, which is appended to orders that add liquidity
on the Exchange in Tape B securities during Regular Trading Hours, are
currently charged a fee of $0.00050 per share. Orders that yield fee
code B would now be charged the proposed standard fee of $0.00030 per
share.
Fee code BB, which is appended to orders that remove
liquidity from the Exchange in Tape B securities during of Regular
Trading Hours, are currently provided a rebate of $0.00020 per share.
Orders that yield fee code BB would now be charged the proposed
standard fee of $0.00030 per share.
Fee code CR, which is appended to orders that remove
liquidity from the Exchange using an eligible routing strategy, are
currently provided a rebate of $0.00020 per share. Under footnote 12,
the eligible routing strategies for fee code CR are ROUT, RDOT, ROUE,
ROUC, and ROCO. The Exchange proposes to delete fee code CR and
footnote 12 as orders that remove liquidity from the Exchange,
regardless of whether any portion of that order is routed away would
now be charged the proposed standard fee of $0.00030 per share as set
forth under the Standard Rates table. The Exchange also proposes to
delete fee code CR from the Standard Rate table.
Fee code N, which is appended to orders that remove
liquidity from the Exchange in Tape C securities during of Regular
Trading Hours, are currently provided a rebate of $0.00020 per share.
Orders that yield fee code N would now be charged the proposed standard
fee of $0.00030 per share.
Fee code PR, which is appended to orders that remove
liquidity from the Exchange using an eligible routing strategy, are
currently provided a rebate of $0.00020 per share. Under footnote 6,
the eligible routing strategies for fee code PR are ROUZ, ROUD, and
ROUQ. The Exchange proposes to delete fee code PR and footnote 6 as
orders that remove liquidity from the Exchange, regardless of whether
any portion of that order is routed away would now be charged the
proposed standard fee of $0.00030 per share as set forth under the
Standard Rates table. The Exchange also proposes to delete fee code PR
from the Standard Rate table.
Fee code V, which is appended to orders that add liquidity
on the Exchange in Tape A securities during Regular Trading Hours, are
currently charged a fee of $0.00050 per share. Orders that yield fee
code V would now be charged the proposed standard fee of $0.00030 per
share.
Fee code W, which is appended to orders that remove
liquidity from the Exchange in Tape A securities during of Regular
Trading Hours, are currently provided a rebate of $0.00020 per share.

[[Page 28922]]

Orders that yield fee code W would now be charged the proposed standard
fee of $0.00030 per share.
Fee code XR, which is appended to orders that remove
liquidity from the Exchange using an eligible routing strategy, are
currently provided a rebate of $0.00020 per share. Under footnote 7,
the eligible routing strategies for fee code PR are DIRC, ROUX, RDOX,
INET, ROBB, SWPA, and SWPB. The Exchange proposes to delete fee code XR
and footnote 7 as orders that remove liquidity from the Exchange,
regardless of whether any portion of that order is routed away would
now be charged the proposed standard fee of $0.00030 per share as set
forth under the Standard Rates table. The Exchange also proposes to
delete fee code XR from the Standard Rate table.
Fee code Y, which is appended to orders that add liquidity
on the Exchange in Tape C securities during Regular Trading Hours, are
currently charged a fee of $0.00050 per share. Orders that yield fee
code Y would now be charged the proposed standard fee of $0.00030 per
share.
The Exchange determines the liquidity adding reduced fee that it
will charge Members using a tiered pricing structure. Currently, the
Exchange charges reduced fee of $0.00030 per share under three Volume
Tiers and two Step-Up tiers described in footnote 4 of the Fee
Schedule. The Exchange proposes to delete all tiers listed under
footnote 4 as all Displayed orders would be charged a fee of $0.00030
per share regardless of whether the Member or MPID achieves certain
volume criteria. A description of each tier under footnote 4 that is to
be deleted is below.
Under Volume Tier 1, a Member must add an ADV equal to or
greater than 1% of the TCV,\14\ including orders with a Non-Displayed
instruction that add liquidity.
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\14\ Id.
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Under Volume Tier 2, a Members must add an ADV equal to or
greater than 0.25% of the TCV, including orders with a Non-Displayed
instruction that add liquidity; and removes an ADV of at least 0.25% of
the TCV.
Under Volume Tier 3, a Member must add an ADV equal to or
greater than 0.15% of TCV, including Non-Displayed orders that add
liquidity; and has an ``added liquidity'' as a percentage of ``added
plus removed liquidity'' of at least 85%.
Under Step-Up Tier 1, the MPID must add an ADV equal to or
greater than 0.10% of the TCV more than the MPID's December 2012 added
ADV as a percentage of TCV or September 2013 added ADV as a percentage
of TCV, whichever is lower.
Under Step-Up Tier 2, the MPID adds an ADV equal to or
greater than 0.05% of the TCV more than the MPID's December 2012 added
ADV as a percentage of TCV or September 2013 added ADV as a percentage
of TCV, whichever is lower; and an ``added liquidity'' as a percentage
of ``added plus removed liquidity'' equal to or greater than 85%.
Non-Displayed Order Fee Change
In securities priced at or above $1.00, the Exchange currently
charges a fee of $0.0010 per share for Non-Displayed orders that add or
remove liquidity. The Exchange now proposes to charge a fee of $0.00050
per share to Non-Displayed orders in securities priced above $1.00 that
remove liquidity (other than for fee code DT, which will be charged no
fee, as described below) and to charge no fee or rebate for Non-
Displayed orders that add liquidity. Unless noted below, the Exchange
does not propose to amend the fees charged for Non-Displayed orders in
securities priced below $1.00.
As a result of the proposed change, the Exchange proposes to make
corresponding changes to the following fee codes for securities priced
at or above $1.00:
Fee code DM is appended to Non-Displayed orders that add
liquidity using MidPoint Discretionary Orders.\15\ Orders that yield
fee code DM in securities priced at or above $1.00 are charged a fee of
$0.00050 per share and orders in securities priced below $1.00 are
charged a fee equal to 0.05% of the transaction's dollar value. Orders
that yield fee code DM would now be free for all securities regardless
of whether they are priced above or below $1.00.
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\15\ The operation of MidPoint Discretionary Orders is described
in Exchange Rule 11.8(e).
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Fee code DT is appended to Non-Displayed orders that
remove liquidity using MidPoint Discretionary Orders. Orders that yield
fee code DT in securities priced at or above $1.00 are charged a fee of
$0.00050 per share and orders in securities priced below $1.00 are
charged a fee equal to 0.05% of the transaction's dollar value. Orders
that yield fee code DT would now be free for all securities regardless
of whether they are priced above or below $1.00.
Fee code HA is appended to Non-Displayed orders that add
liquidity Orders that yield fee code HA in securities priced at or
above $1.00 are charged a fee of $0.00100 per share and orders in
securities priced below $1.00 are charged a fee equal to 0.10% of the
transaction's dollar value. Orders that yield fee code HA would now be
free for all securities regardless of whether they are priced above or
below $1.00.
Fee code HR is appended to Non-Displayed orders that
remove liquidity. Orders that yield fee code HR in securities priced at
or above $1.00 are charged a standard fee of $0.0010 per share and
orders in securities priced below $1.00 are charged a fee equal to
0.10% of the transaction's dollar value. Orders in securities priced at
or above $1.00 that yield fee code HR would now be charged the proposed
standard fee of $0.00050 per share. Orders in securities priced below
$1.00 would be charged 0.05% of the transaction's dollar value.
Fee code RP, which is appended to Non-Displayed orders
that add liquidity using Supplemental Peg Orders,\16\ are charged a fee
of $0.00040 per share. Orders that yield fee code RP would now be free.
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\16\ The operation of Supplemental Peg Orders is described in
Exchange Rule 11.8(g).
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In securities priced at or above $1.00, the Exchange currently
charges a fee of $0.00080 per share for Non-Displayed orders that add
or remove liquidity using MidPoint Peg Orders.\17\ The Exchange now
proposes to charge a fee of $0.00050 per share to MidPoint Peg Orders
in securities priced above $1.00 that remove liquidity and to charge no
fee or rebate for MidPoint Peg Orders that add liquidity. The Exchange
does not propose to amend the fees charged for MidPoint Peg Orders in
securities priced below $1.00. As a result of the proposed change, the
Exchange proposes to make corresponding changes to the following fee
codes for securities priced at or above $1.00:
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\17\ The operation of MidPoint Peg Orders is described in
Exchange Rule 11.8(d).
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Fee code MM is appended to Non-Displayed orders that add
liquidity using MidPoint Peg Orders. Orders in securities priced at or
above $1.00 that yield fee code MM are currently charged a fee of
$0.00080 per share. Orders in securities below $1.00 that yield fee
code MT are currently charged a fee equal to 0.08% of the transaction's
dollar value. Orders that yield fee code MM would now be free for all
securities regardless of whether they are priced above or below $1.00.
Fee code MT is appended to Non-Displayed orders that
remove liquidity using MidPoint Peg Orders. Orders in securities priced
at or above $1.00 that yield fee code MT are currently charged a fee of
$0.00080 per share. Orders in securities below $1.00 that yield fee
code MT are currently charged a fee equal to 0.08% of the transaction's
dollar value. Orders that yield fee code

[[Page 28923]]

MT in securities priced at or above $1.00 would now be charged the
proposed standard fee of $0.00050 per share. Orders in securities
priced below $1.00 would be charged 0.05% of the transaction's dollar
value.
Fee code PA, which is appended to orders that add
liquidity using the RMPT or RMPL routing strategies,\18\ are charged a
fee of $0.00080 per share. Orders that yield fee code PA would now be
charged no fee.
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\18\ The RMPL and RMPT routing strategies utilize a MidPoint Peg
Order to 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
MidPoint Peg Order, unless otherwise instructed by the User. See
Exchange Rule 11.11(g)(13).
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Fee code PT, which is appended to orders that add
liquidity using the RMPT or RMPL routing strategies, are charged a fee
of $0.00100 per share. Orders that yield fee code PT would now be
charged the proposed standard fee of $0.00050 per share.
Currently footnote 2 of the fee schedule states that the rates for
fee codes HA, HR, MM and MT are contingent upon Member adding or
removing an ADV of at least 1,000,000 shares Non-Displayed (yields fee
codes HA, HR, DM, DT, MM, MT and RP) or Member adding an ADV of at
least 8,000,000 shares (Displayed and Non-Displayed). For securities
priced at or above $1.00, Members not meeting either minimum are
currently charged $0.0030 per share for fee codes HA, HR, MM and MT.
For securities priced below $1.00, Members not meeting either minimum
are currently charged 0.30% of the dollar value of the transaction. The
Exchange does not propose any contingency requirements or conditions
that Members must satisfy to receive the proposed rates for Non-
Displayed orders. Therefore, the Exchange proposes to delete footnote 2
of the fee schedule as receipt of the proposed rates would not be
contingent on the Member meeting any volume requirements. All Non-
Displayed orders in securities priced below $1.00 would not be
contingent to any minimum volume requirements and subject to the
current rates set forth in the applicable fee code.
The Exchange also proposes to modify or delete tiers applicable to
Non-Displayed Orders. The Exchange currently offers two tiers under
footnote 3, the RMPT/RMPL Tiers, under which a Member receives a
discounted fee of either $0.0006 or $0.0008 per share for orders
yielding fee codes PT or PX where that Member satisfies certain
criteria. Under Tier 1, a Member receives a reduced fee of $0.0008 per
share where they add or remove an ADV greater than or equal to
2,000,000 shares using the RMPT or RMPL routing strategy. Under Tier 2,
a Member receives a reduced fee of $0.0006 per share where they add or
remove an ADV greater than or equal to 4,000,000 shares using the RMPT
or RMPL routing strategy. As described above, fee codes PT and PX are
appended to orders that remove liquidity or are routed, respectively,
using the RMPT or RMPL routing strategies. Orders that yield fee code
PT would be charged a fee of $0.00050 as proposed herein. Orders that
yield fee code PX would continue to be charged a fee of $0.00120 per
share. Because the fee for orders that yield fee code PT would be lower
than the reduced fee provided by the two RMPT/RMPL Tiers, the Exchange
proposes to only apply the reduced fee for those tiers to orders that
yield fee code PX as those orders would be charged a higher fee of
$0.00120 per share if they do not achieve the RMPT/RMPL tier's
criteria.
The Exchange also offers two tiers under footnote 13, the Midpoint
Add and Remove Tiers, under which a Member receives a reduced fee of
$0.0006 or $0.0004 per share for orders that yield fee code MM or MT
where that Member satisfies certain criteria. As described above, fee
codes MM and MT are appended to Midpoint Peg Orders that add or remove
liquidity, respectively. Under Tier 1, Members are charged a reduced
fee of $0.0006 per share where the Member has an ADV equal to or
greater than 1,200,000 shares in orders that yield fee codes MM or MT.
Under Tier 2, Members are charged a reduced fee of $0.0004 per share
where the Member has an ADV equal to or greater than 2,500,000 shares
in orders that yield fee codes MM or MT. The Exchange proposes to
delete all tiers listed under footnote 13 as all MidPoint Peg orders
that remove liquidity would be charged the proposed standard rates
regardless of whether the Member achieves certain volume criteria--a
fee of $0.00050 per share and those orders that add liquidity would be
charged no fee.
Implementation Date
The Exchange proposes to implement the above changes to its fee
schedule on immediately.\19\
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\19\ The Exchange initially filed the proposal on June 1, 2017.
(SR-BatsEDGA-2017-17). On June 12, 2017, the Exchange withdrew SR-
BatsEDGA-2017-17 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,\20\ in general, and
furthers the objectives of Section 6(b)(4),\21\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and other persons using its
facilities. The Exchange also believes the proposed rule change is not
unfairly discriminatory as it would apply to all Members.
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\20\ 15 U.S.C. 78f.
\21\ 15 U.S.C. 78f(b)(4).
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The Exchange believes its proposal to replace its current taker-
maker pricing model with a new low fee model where it would charge a
fee or provide the execution free of charge is equitable and reasonable
as it would serve to simply its fee schedule to provide low standard
rates for Displayed and Non-Displayed orders while also eliminating
rebates and other pricing incentives. The Exchange submits this
proposal in response to the industry feedback and the debate regarding
exchange fee structures. Recent industry discourse has focused on fee
structures and their purported effect on liquidity provision, liquidity
taking, potential conflicts and order routing in the U.S. equity
market. In addition, the Commission's EMSAC recommended that the
Commission propose a pilot program to adjust the access fee cap under
Rule 610 of Regulation NMS to better understand these dynamics.\22\
Other exchanges have proposed to not offer rebates and implemented a
low fee model \23\ as the Exchange proposes herein. The Exchange
submits this proposal in response to the industry feedback and debate
regarding exchange fee structures and to move the discussion closer to
a market practice of reduced transaction costs.
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\22\ See supra note 7.
\23\ See the Investors Exchange, Inc. fee schedule available at
https://iextrading.com/trading/ (dated August 19, 2016).
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The proposed fee structure provides a simple, straight forward low
cost model that seeks to treat both liquidity providers and removers
equally. Adopting a low fee model under which Displayed orders are
charged the same low fee regardless of whether they add or remove
liquidity will serve to provide an equal economic incentive to Members
that not only seek to remove liquidity, but also to add liquidity to
the Exchange. The Exchange believes that reducing the standard fee for
Displayed orders and charging no fee for Non-Displayed orders that add
liquidity will

[[Page 28924]]

seek to further incentives Members to add liquidity to the Exchange.
The potential increase in posted liquidity would serve to improve price
discovery, depth of liquidity, and overall execution quality on the
Exchange. The Exchange further believes that it is equitable and
reasonable to charge no fee for orders that yield fee code DT, which is
appended to Non-Displayed orders that remove liquidity using MidPoint
Discretionary Orders, as it is intended to incentives the use of
MidPoint Discretionary Orders and improve liquidity at the midpoint of
the NBBO. Charging no fee for orders that yield fee code DT is designed
to encourage the posting of contra-side orders that add liquidity at
the midpoint of the NBBO as such orders could receive increased
execution opportunities thought the possible increase in entry of
MidPoint Discretionary Orders.
The modification and elimination of certain reduced fees via the
current tiered pricing model as proposed herein is also equitable and
reasonable because it would aid in simplifying the fee schedule and
result in all Member's being charged the same rates for all
transactions regardless of their monthly volumes. The Exchange
generally believes that volume-based pricing provides 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. However, the elimination of
the Exchange's current tiered pricing is consistent with the proposed
fee model which is designed to attract additional order flow though low
fees for both adding and removing liquidity.

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'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 \24\ and paragraph (f) of Rule 19b-4
thereunder.\25\ 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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\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 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-2017-18 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-2017-18. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-BatsEDGA-2017-18, and should be
submitted on or before July 17, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

\26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13228 Filed 6-23-17; 8:45 am]
BILLING CODE 8011-01-P

28920 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices

III. Discussion and Commission transactions consistent with Section notice is hereby given that on June 12,
Findings 17A(b)(3)(F). 2017, Bats EDGA Exchange, Inc. (the
For similar reasons, the proposed rule ‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Section 19(b)(2)(C) of the Act directs
changes are also consistent with Rule Securities and Exchange Commission
the Commission to approve a propose
17Ad–22(e)(17) in that they are (‘‘Commission’’) the proposed rule
rule change of a self-regulatory
designed to reduce operational risk change as described in Items I and II
organization if it finds that such
outside of ICE Clear Europe’s control.13 below, which Items have been prepared
proposed rule change is consistent with
The proposed rule changes are intended by the Exchange. The Exchange has
the requirements of the Act and the
to reduce ICE Clear Europe’s external designated the proposed rule change as
rules and regulations thereunder operational risk by implementing an one establishing or changing a member
applicable to such organization.10 appropriate system that will allow ICE due, fee, or other charge imposed by the
Section 17A(b)(3)(F) of the Act requires, Clear Europe to exert greater control Exchange under Section 19(b)(3)(A)(ii)
among other things, that the rules of a over the price submission process by of the Act 3 and Rule 19b–4(f)(2)
registered clearing agency be designed requiring direct connection and thereunder,4 which renders the
to promote the prompt and accurate communication between ICE Clear proposed rule change effective upon
clearance and settlement of securities Europe and its Clearing Members filing with the Commission. The
transactions and, to the extent instead of relying on an intermediary to Commission is publishing this notice to
applicable, derivative agreements, collect price information needed for ICE solicit comments on the proposed rule
contracts, and transactions.11 Rule Clear Europe’s price discovery process. change from interested persons.
17Ad–22(e)(17) requires, in relevant As a result, because ICE Clear Europe
part, that a registered clearing agency will be able to reduce its reliance on I. Self-Regulatory Organization’s
establish, implement, maintain, and intermediaries, and thereby reduce Statement of the Terms of Substance of
enforce written policies and procedures operational risk that is outside of its the Proposed Rule Change
reasonably designed to manage the control, the Commission finds that the The Exchange filed a proposal to
covered clearing agency’s operational proposed rule changes are consistent amend its fee schedule to replace its
risk by identifying the plausible sources with the requirements of Rule 17Ad– current inverted pricing model with a
of operational risk, both internal and 22(e)(17). simple, low fee model.
external, and mitigating their impact The text of the proposed rule change
through the use of appropriate systems, IV. Conclusion is available at the Exchange’s Web site
policies, procedures, and controls, and It is therefore ordered pursuant to at www.bats.com, at the principal office
by ensuring that systems have a high Section 19(b)(2) of the Act that the of the Exchange, and at the
degree of security, resiliency, proposed rule change (SR–ICEEU–2017– Commission’s Public Reference Room.
operational reliability, and adequate, 003), as amended by Amendment No. 1 II. Self-Regulatory Organization’s
scalable capacity.12 thereto, be, and hereby is, approved.14 Statement of the Purpose of, and
The Commission finds that the For the Commission by the Division of Statutory Basis for, the Proposed Rule
proposed rule change, which modifies Trading and Markets, pursuant to delegated Change
ICE Clear Europe’s EOD Price Discovery authority.15
Policy to implement a direct price In its filing with the Commission, the
submission process for Clearing Eduardo A. Aleman, Exchange included statements
Members, is consistent with Section Assistant Secretary. concerning the purpose of and basis for
17A of the Act and Rule 17Ad–22 the proposed rule change and discussed
[FR Doc. 2017–13231 Filed 6–23–17; 8:45 am]
thereunder. The proposed rule change is any comments it received on the
BILLING CODE 8011–01–P
consistent with the requirements of proposed rule change. The text of these
Section 17A(b)(3)(F) that the rules of a statements may be examined at the
registered clearing agency be designed SECURITIES AND EXCHANGE places specified in Item IV below. The
to promote the prompt and accurate COMMISSION Exchange has prepared summaries, set
clearance and settlement of securities forth in Sections A, B, and C below, of
[Release No. 34–80976; File No. SR– the most significant parts of such
transactions and, to the extent
BatsEDGA–2017–18] statements.
applicable, derivative agreements,
contracts, and transactions. By reducing Self-Regulatory Organizations; Bats A. Self-Regulatory Organization’s
operational risk the proposed rule EDGA Exchange, Inc.; Notice of Filing Statement of the Purpose of, and the
changes reduce the likelihood that ICE and Immediate Effectiveness of a Statutory Basis for, the Proposed Rule
Clear Europe will be unable to complete Proposed Rule Change Related To Change
its end-of-day price discovery process. Amend Its Fee Schedule To Replace
Completion of the end-of-day price 1. Purpose
Current Inverted Pricing Model With
discovery process is a necessary and Low Fee Model Most exchanges today utilize maker-
essential element in ICE Clear Europe’s taker pricing under which they provide
clearance and settlement processes. The June 20, 2017. a rebate to orders that add liquidity and
Commission believes that the proposed Pursuant to Section 19(b)(1) of the charge a fee to orders that remove
changes should enhance ICE Clear Securities Exchange Act of 1934 (the liquidity. The Exchange currently
Europe’s ability to complete the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 incorporates an inverse of that pricing
sradovich on DSK3GMQ082PROD with NOTICES

necessary pricing process effectively model under which it charges a fee to
13 Id.
and thereby promote the prompt and add liquidity and provides a rebate to
14 In approving the proposed rule change, the
accurate clearance and settlement of remove liquidity. As described below,
Commission considered the proposal’s impact on
derivative agreements, contracts and efficiency, competition, and capital formation. 15 the Exchange proposes to amend its fee
U.S.C. 78c(f). schedule to replace its current inverted
10 15 U.S.C. 78s(b)(2)(C). 15 17 CFR 200.30–3(a)(12).
11 15 U.S.C. 78q–1(b)(3)(F). 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A)(ii).
12 17 CFR 240.17Ad–22(e)(17). 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(2).

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28924 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices

seek to further incentives Members to fees would serve to impair an Internet Web site (http://www.sec.gov/
add liquidity to the Exchange. The exchange’s ability to compete for order rules/sro.shtml). Copies of the
potential increase in posted liquidity flow and members rather than submission, all subsequent
would serve to improve price discovery, burdening competition. The Exchange amendments, all written statements
depth of liquidity, and overall execution believes that its proposal would not with respect to the proposed rule
quality on the Exchange. The Exchange burden intramarket competition because change that are filed with the
further believes that it is equitable and the proposed rate would apply Commission, and all written
reasonable to charge no fee for orders uniformly to all Members. communications relating to the
that yield fee code DT, which is proposed rule change between the
appended to Non-Displayed orders that C. Self-Regulatory Organization’s Commission and any person, other than
remove liquidity using MidPoint Statement on Comments on the those that may be withheld from the
Discretionary Orders, as it is intended to Proposed Rule Change Received From public in accordance with the
incentives the use of MidPoint Members, Participants, or Others provisions of 5 U.S.C. 552, will be
Discretionary Orders and improve The Exchange has not solicited, and available for Web site viewing and
liquidity at the midpoint of the NBBO. does not intend to solicit, comments on printing in the Commission’s Public
Charging no fee for orders that yield fee this proposed rule change. The Reference Room, 100 F Street NE.,
code DT is designed to encourage the Exchange has not received any written Washington, DC 20549, on official
posting of contra-side orders that add comments from members or other business days between the hours of
liquidity at the midpoint of the NBBO interested parties. 10:00 a.m. and 3:00 p.m. Copies of the
as such orders could receive increased filing also will be available for
III. Date of Effectiveness of the
execution opportunities thought the inspection and copying at the principal
possible increase in entry of MidPoint Proposed Rule Change and Timing for office of the Exchange. All comments
Discretionary Orders. Commission Action received will be posted without change;
The modification and elimination of The foregoing rule change has become the Commission does not edit personal
certain reduced fees via the current effective pursuant to Section 19(b)(3)(A) identifying information from
tiered pricing model as proposed herein of the Act 24 and paragraph (f) of Rule submissions. You should submit only
is also equitable and reasonable because 19b–4 thereunder.25 At any time within information that you wish to make
it would aid in simplifying the fee 60 days of the filing of the proposed rule available publicly. All submissions
schedule and result in all Member’s change, the Commission summarily may should refer to File No. SR-BatsEDGA–
being charged the same rates for all temporarily suspend such rule change if 2017–18, and should be submitted on or
transactions regardless of their monthly it appears to the Commission that such before July 17, 2017.
volumes. The Exchange generally action is necessary or appropriate in the For the Commission, by the Division of
believes that volume-based pricing public interest, for the protection of Trading and Markets, pursuant to delegated
provides benefits or discounts that are investors, or otherwise in furtherance of authority.26
reasonably related to: (i) The value to an the purposes of the Act. Eduardo A. Aleman,
exchange’s market quality; (ii) Assistant Secretary.
associated higher levels of market IV. Solicitation of Comments
[FR Doc. 2017–13228 Filed 6–23–17; 8:45 am]
activity, such as higher levels of Interested persons are invited to
BILLING CODE 8011–01–P
liquidity provision and/or growth submit written data, views, and
patterns; and (iii) the introduction of arguments concerning the foregoing,
higher volumes of orders into the price including whether the proposed rule SECURITIES AND EXCHANGE
and volume discovery processes. change is consistent with the Act. COMMISSION
However, the elimination of the Comments may be submitted by any of
Exchange’s current tiered pricing is the following methods: [Release No. 34–80977; File No. SR–
consistent with the proposed fee model BatsEDGX–2017–30]
which is designed to attract additional Electronic Comments
• Use the Commission’s Internet Self-Regulatory Organizations; Bats
order flow though low fees for both
comment form (http://www.sec.gov/ EDGX Exchange, Inc.; Notice of Filing
adding and removing liquidity.
rules/sro.shtml); or and Immediate Effectiveness of a
B. Self-Regulatory Organization’s • Send an email to rule-comments@ Proposed Rule Change to Fees for Use
Statement on Burden on Competition sec.gov. Please include File No. SR- on Bats EDGX Exchange, Inc.
This proposed rule change does not BatsEDGA–2017–18 on the subject line. June 20, 2017.
impose any burden on competition that Pursuant to Section 19(b)(1) of the
is not necessary or appropriate in Paper Comments
Securities Exchange Act of 1934 (the
furtherance of the purposes of the Act. • Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2
The Exchange does not believe that this to Secretary, Securities and Exchange notice is hereby given that on June 12,
change represents a significant Commission, 100 F Street NE., 2017, Bats EDGX Exchange, Inc. (the
departure from previous pricing offered Washington, DC 20549–1090. ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
by the Exchange’s competitors. The All submissions should refer to File No. Securities and Exchange Commission
proposed rates would apply uniformly SR-BatsEDGA–2017–18. This file (‘‘Commission’’) the proposed rule
to all Members, and Members may opt number should be included on the change as described in Items I, II and III
to disfavor the Exchange’s pricing if
sradovich on DSK3GMQ082PROD with NOTICES

subject line if email is used. To help the below, which Items have been prepared
they believe that alternatives offer them Commission process and review your by the Exchange. The Exchange has
better value. Accordingly, the Exchange comments more efficiently, please use designated the proposed rule change as
does not believe that the proposed only one method. The Commission will one establishing or changing a member
changes will impair the ability of post all comments on the Commission’s
Members or competing venues to 26 17 CFR 200.30–3(a)(12).
maintain their competitive standing in 24 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
the financial markets. Further, excessive 25 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.

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Document Created: 2018-11-14 10:11:02
Document Modified: 2018-11-14 10:11:02

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 28920