82 FR 37645 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats BYX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 154 (August 11, 2017)

[Federal Register Volume 82, Number 154 (Friday, August 11, 2017)]
[Notices]
[Pages 37645-37647]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-16929]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81326; File No. SR-BatsBYX-2017-17]


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

August 7, 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 July 31, 2017, Bats BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') 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 BYX 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to modify existing 
Tier 3 and add a new tier under footnote 1, Add/Remove Volume Tiers. 
The

[[Page 37646]]

Exchange currently offers five tiers under footnote 1 that offer 
reduced fees for displayed orders that yield fee codes B,\6\ V \7\ and 
Y,\8\ and an enhanced rebate for orders that remove liquidity yielding 
fee codes BB,\9\ N \10\ and W.\11\ The Exchange proposes to amend the 
criteria necessary to receive the enhanced rebate under Tier 3 under 
footnote 1. Tier 3 provides a rebate of $0.0015 [sic] per share for 
orders where that Member has an ADAV \12\ equal to or greater than 
0.55% of the TCV.\13\ The Exchange proposes to increase the tier's 
requirements to now require the Member to have an ADAV equal to or 
greater than 0.80% of the TCV. The Exchange does not propose to amend 
the tier's rebate.
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    \6\ Fee code B is appended to displayed orders that add 
liquidity to BYX (Tape B) and is assessed a fee of $0.0018 per 
share. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \7\ Fee code V is appended to displayed orders that add 
liquidity to BYX (Tape A) and is assessed a fee of $0.0018 per 
share. Id.
    \8\ Fee code Y is appended to displayed orders that add 
liquidity to BYX (Tape C) and is assessed a fee of $0.0018 per 
share. Id.
    \9\ Fee code BB is appended to orders that remove liquidity from 
BYX (Tape B) and is assessed a rebate of $0.0010 per share. Id.
    \10\ Fee code N is appended to orders that remove liquidity from 
BYX (Tape C) and is assessed a rebate of $0.0010 per share. Id.
    \11\ Fee code W is appended to orders that remove liquidity from 
BYX (Tape A) and is assessed a rebate of $0.0010 per share. See the 
Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \12\ ``ADAV'' means average daily volume calculated as the 
number of shares added per day on a monthly basis. Id.
    \13\ ``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. Id.
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    The Exchange also proposes to add a new tier under footnote 1, to 
be known as Tier 5,\14\ under which a Member would be charged a reduced 
fee of $0.0012 per share on orders that yield fee codes B, V and Y, 
where that Member's Market Participant Identifier (``MPID'') has an 
ADAV equal to or greater than 0.55% of the TCV.
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    \14\ With the addition of proposed Tier 5 under footnote 1, the 
Exchange proposes to renumber current Tier 5 as Tier 6.
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    The Exchange proposes to implement the above changes to its fee 
schedule on August 1, 2017.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\15\ in general, and 
furthers the objectives of Section 6(b)(4),\16\ 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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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed tier under footnote 1is 
[sic] equitable and reasonable because such pricing programs reward a 
Member's growth pattern on the Exchange and such increased volume will 
allow the Exchange to continue to provide and potentially expand the 
its incentive programs. The Exchange believes that providing the same 
reduced rate to Members under Tiers 3 and 5 while requiring more 
stringent requirements under Tier 3 than Tier 5 is equitable and 
reasonable as the proposed criteria reasonable [sic] reflect the 
segment of the Member's order flow that is to be measured. Under Tier 
3, the Member as a whole must meet a higher standard than their 
individual MPID under Tier 5. The Exchange believes this is equitable 
and reasonable because a Member may have multiple MPIDs that it may 
aggregate volume across to meet Tier 3's criteria, while Tier 5 is 
limited to the individual MPID. The Exchange further believes that the 
proposed tier and modifications are reasonable, fair and equitable 
because the liquidity from the proposed changes would benefit all 
investors by deepening the Exchange's liquidity pool, offering 
additional flexibility for all investors to enjoy cost savings, 
supporting the quality of price discovery, promoting market 
transparency and improving investor protection. These pricing programs 
are also not unfairly discriminatory in that it is available to all 
Members.
    In addition, volume-based fees 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

    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 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 unsolicited 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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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

[[Page 37647]]

     Send an email to [email protected]. Please include 
File Number SR-BatsBYX-2017-17 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 Number SR-BatsBYX-2017-17. 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 Number SR-BatsBYX-2017-17 and should 
be submitted on or before September 1, 2017.
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    \19\ 17 CFR 200.30-3(a)(12).\

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16929 Filed 8-10-17; 8:45 am]
 BILLING CODE 8011-01-P