| Page Range | 28924-28927 | |
| FR Document | 2017-13229 |
[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)] [Notices] [Pages 28924-28927] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-13229] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80977; File No. SR-BatsEDGX-2017-30] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use on Bats EDGX Exchange, Inc. 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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 [[Page 28925]] 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members \5\ and non-Members of the Exchange pursuant to EDGX Rules 15.1(a) and (c). --------------------------------------------------------------------------- \5\ The term ``Member'' is defined as ``any registered broker or dealer that has been admitted to membership in the Exchange.'' See Exchange Rule 1.5(n). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site at www.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 applicable to its equities trading platform (``EDGX Equities'') to: (i) Modify the rates associated with fee codes AA, RA and RR; and (ii) decrease the condition necessary to qualify for the enhanced rebate provided pursuant to the Investor Depth Tier under footnote 1. The Exchange notes that Bats EDGA Exchange, Inc. (``EDGA'') is implementing certain pricing changes effective June 1, 2017, including modification of various fees and rebates to add and remove liquidity with a displayed or IOC order to a flat fee of $0.0003 per share to add or remove liquidity with a displayed or IOC order.\6\ The proposed changes to AA, RA, and RR are proposed in light of these changes. --------------------------------------------------------------------------- \6\ See Press Release, Bats Announces Fee Overhaul of EDGA Equities Exchange (May 30, 2017), available at http://ir.cboe.com/press-releases/2017/05-30-2017.aspx. --------------------------------------------------------------------------- Fee Code AA The Exchange proposes to modify the rate associated with orders yielding fee code AA, which results from an order routed to EDGA using ALLB routing strategy,\7\ from a $0.0002 per share rebate to a fee of $0.0003 per share for securities priced at or above $1.00. The Exchange does not propose to modify the rate for orders yielding fee code AA for securities priced below $1.00, which are currently not charged a fee nor provided a rebate. --------------------------------------------------------------------------- \7\ ALLB is a routing option under which the order checks the System for available shares and is then sent to the Bats BYX Exchange, Inc. (``BYX''), EDGA, and Bats BZX Exchange, Inc. (``BZX'' collectively with the Exchange, BYX, and EDGA, the ``BGM Affiliated Exchanges''). See the Exchange's routing strategies available at http://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf. See also Exchange Rule 11.11(g)(3). --------------------------------------------------------------------------- Fee Code RA The Exchange proposes to decrease the fee associated with orders yielding fee code RA, which results from an order routed to EDGA which adds liquidity, from a fee of $0.0005 per share to a fee of $0.0003 per share for securities priced at or above $1.00. The Exchange does not propose to modify the rate for orders yielding fee code RA for securities priced below $1.00, which are currently not charged a fee nor provided a rebate. Fee Code RR The Exchange proposes to decrease the rate associated with orders yielding fee RR, which result from an order routed to EDGA using the Destination Specific routing strategy (also known as ``DIRC''),\8\ from a rebate of $0.0002 per share to a fee of $0.0003 per share for all securities priced at or above $1.00. The Exchange does not propose to modify the rate for securities priced below $1.00. --------------------------------------------------------------------------- \8\ See the Exchange's routing strategies available at http://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf. See also Rule 11.11(g)(14). --------------------------------------------------------------------------- Single MPID Investor Tier The Exchange currently offers nine Add Volume Tiers under footnote 4, which provide enhanced rebates ranging from $0.0025 to $0.0032 per share for qualifying orders which yield fee codes B,\9\ V,\10\ Y,\11\ 3 \12\ and 4.\13\ The Exchange proposes to modify the criteria necessary to achieve the Investor Depth Tier as described below. --------------------------------------------------------------------------- \9\ Fee code B is appended to displayed orders which add liquidity to Tape B and is provided a rebate of $0.0020 per share. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/. \10\ Fee code V is appended to displayed orders which add liquidity to Tape A and is provided a rebate of $0.0020 per share. \11\ Fee code Y is appended to displayed orders which add liquidity to Tape C and is provided a rebate of $0.0020 per share. Id. \12\ Fee code 3 is appended to displayed orders which add liquidity to Tape A or C during the post-market or pre-market sessions and is provided a rebate of $0.0020 per share. Id. \13\ Fee code 4 is appended to displayed orders which add liquidity to Tape B during the post-market or pre-market sessions and is provided a rebate of $0.0020 per share. Id. ---------------------------------------------------------------------------Currently, under the Investor Depth Tier a Member may be provided an enhanced rebate of $0.0033 per share where that Member: (i) Adds an ADV \14\ greater than or equal to 0.15% of the TCV; \15\ (ii) has an ``added liquidity'' as a percentage of ``added plus removed liquidity'' greater than or equal to 85%; and (iii) adds an ADV greater than or equal to 400,000 shares as non-displayed orders that yield fee code HA,\16\ HI,\17\ and/or MM.\18\ As amended, under the Investor Depth Tier a Member may be provided an enhanced rebate of $0.0033 per share where that Member: (i) Adds an ADV greater than or equal to 0.12% of the TCV; (ii) has an ``added liquidity'' as a percentage of ``added plus removed liquidity'' greater than or equal to 85%; and (iii) adds an ADV greater than or equal to 400,000 shares as non-displayed orders that yield fee code HA, HI, and/or MM. --------------------------------------------------------------------------- \14\ ``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. ADV is calculated on a monthly basis. Id. \15\ ``TCV'' means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/. \16\ Fee code HA is appended to non-displayed orders which add liquidity on the Exchange and are provided an enhanced rebate of $0.0015 for securities priced at or above $1.00, and $0.0003 for securities priced below $1.00. Id. \17\ Fee code HI is appended to non-displayed orders which receive price improvement and add liquidity on the Exchange and are neither charged a fee nor provided a rebate. Id. \18\ Fee code MM is appended to non-displayed orders which add liquidity on the Exchange using Mid-Point Peg and are provided an enhanced rebate of $0.0015 for securities priced at or above $1.00, and $0.0003 for securities priced below $1.00. Id. --------------------------------------------------------------------------- [[Page 28926]] Implementation Date The Exchange proposes to implement the above changes to its fee schedule immediately.\19\ --------------------------------------------------------------------------- \19\ The Exchange initially submitted the proposed fee change on June 1, 2017. (SR-Bats EDGX-2017-27). On, June 12, 2017 the Exchange withdrew SR-Bats EDGX-2017-27 and submitted this filing. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposed rule changes are 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 notes that it operates in a highly- competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The proposed rule changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f. \21\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Modification of the Investor Depth Add Tier The Exchange believes that the proposed modifications to the tiered pricing structure are reasonable, fair and equitable, and non- discriminatory. The Exchange operates in a highly competitive market in which market participants may readily send order flow to many competing venues if they deem fees at the Exchange to be excessive or incentives provided to be insufficient. The proposed structure remains intended to attract order flow to the Exchange by offering market participants a competitive pricing structure. The Exchange believes it is reasonable to offer and incrementally modify incentives intended to help to contribute to the growth of the Exchange. Volume-based pricing such as that proposed herein have been widely adopted by exchanges, including the Exchange, and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to: (i) The value to an exchange's market quality; (ii) associated higher levels of market activity, such as higher levels of liquidity provisions and/or growth patterns; and (iii) introduction of higher volumes of orders into the price and volume discovery processes. Fee Codes AA, RA, and RR As noted above, EDGA is implementing certain pricing changes effective June 1, 2017, including modification of various fees and rebates to and remove liquidity with a displayed or IOC order to a flat fee of $0.0003 per share to add or remove liquidity with a displayed or IOC order.\22\ The changes to fee codes AA, RA, and RR are proposed in light of these changes and reflect a pass-through of the pricing provided by EDGA. As the pricing in securities priced at or above $1.00 reflects the same pricing a Member would receive for participation on EDGA directly and the pricing in securities priced below $1.00 is based on the current pricing model applied by the Exchange, the Exchange believes the proposed fees are reasonable and equitably allocated. The Exchange further believes the proposed fees are non-discriminatory because they apply uniformly to all Members. --------------------------------------------------------------------------- \22\ See supra, note 4. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that any of the proposed changes to the Exchange's routing pricing burden competition, as they are based on the pricing on other venues. Similarly, the Exchange does not believe that the proposed change to the Exchange's tiered pricing structure burden competition, but instead, that they enhance competition as they are intended to increase the competitiveness of EDGX by modifying pricing incentives in order to attract order flow and incentivize participants to increase their participation on the Exchange. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee structures to be unreasonable or excessive. The proposed changes are generally intended to enhance the rebates for liquidity added to the Exchange, which is intended to draw additional liquidity to the Exchange. The Exchange does not believe the proposed amendments would burden intramarket competition as they would be available to all Members uniformly. 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 \23\ and paragraph (f) of Rule 19b-4 thereunder.\24\ 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. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(3)(A). \24\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-BatsEDGX-2017-30 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-BatsEDGX-2017-30. 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 [[Page 28927]] 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-BatsEDGX-2017-30, and should be submitted on or before July 17, 2017. --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-13229 Filed 6-23-17; 8:45 am] BILLING CODE 8011-01-P
| 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 28924 |