82_FR_39117 82 FR 38960 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period

82 FR 38960 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price Improvement Program, To Extend the Pilot Period

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 157 (August 16, 2017)

Page Range38960-38962
FR Document2017-17273

Federal Register, Volume 82 Issue 157 (Wednesday, August 16, 2017)
[Federal Register Volume 82, Number 157 (Wednesday, August 16, 2017)]
[Notices]
[Pages 38960-38962]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17273]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81368; File No. SR-BatsBYX-2017-18]


Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.24, Retail Price Improvement Program, To Extend the Pilot Period

August 10, 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 August 8, 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 and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to extend the pilot period for the 
Exchange's Retail Price Improvement (``RPI'') Program (the 
``Program''), which was set to expire on July 31, 2017, for 12 months, 
to expire on July 31, 2018.
    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
    In November 2012, the Commission approved the RPI Program on a 
pilot basis.\5\ The Program is designed to attract retail order flow to 
the Exchange, and allows such order flow to receive potential price 
improvement. The Program is currently limited to trades occurring at 
prices equal to or greater than $1.00 per share. Under the Program, all 
Exchange Users \6\ are permitted to provide potential price improvement 
for Retail Orders \7\ in the form of non-displayed interest that is 
better than the national best bid that is a Protected Quotation 
(``Protected NBB'') or the national best offer that is a Protected 
Quotation (``Protected NBO'', and together with the Protected NBB, the 
``Protected NBBO'').\8\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 68303 (November 27, 
2012), 77 FR 71652 (December 3, 2012) (``RPI Approval Order'') (SR-
BYX-2012-019).
    \6\ A ``User'' is defined in BYX Rule 1.5(cc) as any member or 
sponsored participant of the Exchange who is authorized to obtain 
access to the System.
    \7\ A ``Retail Order'' is defined in Rule 11.24(a)(2) as an 
agency order that originates from a natural person and is submitted 
to the Exchange by a RMO, provided that no change is made to the 
terms of the order with respect to price or side of market and the 
order does not originate from a trading algorithm or any 
computerized methodology. See Rule 11.24(a)(2).
    \8\ The term Protected Quotation is defined in BYX Rule 1.5(t) 
and has the same meaning as is set forth in Regulation NMS Rule 
600(b)(58). The terms Protected NBB and Protected NBO are defined in 
BYX Rule 1.5(s). The Protected NBB is the best-priced protected bid 
and the Protected NBO is the best-priced protected offer. Generally, 
the Protected NBB and Protected NBO and the national best bid 
(``NBB'') and national best offer (``NBO'', together with the NBB, 
the ``NBBO'') will be the same. However, a market center is not 
required to route to the NBB or NBO if that market center is subject 
to an exception under Regulation NMS Rule 611(b)(1) or if such NBB 
or NBO is otherwise not available for an automatic execution. In 
such case, the Protected NBB or Protected NBO would be the best-
priced protected bid or offer to which a market center must route 
interest pursuant to Regulation NMS Rule 611.
---------------------------------------------------------------------------

    The Program was approved by the Commission on a pilot basis running 
one-year from the date of implementation.\9\ The Commission approved 
the Program on November 27, 2012.\10\ The Exchange implemented the 
Program on January 11, 2013, and has extended the pilot period four 
times.\11\ The pilot period for the Program expired on July 31, 2017. 
The lapse of the pilot was inadvertent and this filing seeks to 
reinstate the pilot under the same terms as the original pilot.
---------------------------------------------------------------------------

    \9\ See RPI Approval Order, supra note 5 at 71652.
    \10\ Id.
    \11\ See Securities Exchange Act Release Nos. 71249 (January 7, 
2014), 79 FR 2229 (January 13, 2014) (SR-BYX-2014-001) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Extend the Pilot Period for the Retail Price Improvement Program); 
74111 (January 22, 2015), 80 FR 4598 (January 28, 2015) (SR-BYX-
2015-05) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to Extend the Pilot Period for BATS Y-Exchange, Inc.'s 
Retail Price Improvement (``RPI'') Program for 12 Months, To Expire 
on January 31, 2016); 76965 (January 22, 2016), 81 FR 4682 (January 
27, 2016) (SR-BYX-2016-01) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change to Rule 11.24, Retail Price 
Improvement Program, To Extend the Pilot Period); 78180 (June 28, 
2016), 81 FR 43306 (July 1, 2016) (SR-BYX-2016-15) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change to Rule 11.24, 
Retail Price Improvement Program, To Extend the Pilot Period).
---------------------------------------------------------------------------

Proposal To Extend the Operation of the Program
    The Exchange established the RPI Program in an attempt to attract 
retail order flow to the Exchange by potentially providing price 
improvement to such order flow. The Exchange believes that the Program 
promotes competition for retail order flow by allowing Exchange members 
to submit Retail Price Improvement Orders (``RPI Orders'') \12\ to 
interact with Retail Orders. Such competition has the ability

[[Page 38961]]

to promote efficiency by facilitating the price discovery process and 
generating additional investor interest in trading securities, thereby 
promoting capital formation. The Exchange believes that extending the 
pilot is appropriate because it will allow the Exchange and the 
Commission additional time to gather and analyze data regarding the 
Program that the Exchange has committed to provide.\13\ As such, the 
Exchange believes that it is appropriate to extend the current 
operation of the Program.\14\ Through this filing, the Exchange seeks 
to extend the current pilot period of the Program until July 31, 2018.
---------------------------------------------------------------------------

    \12\ A ``Retail Price Improvement Order'' is defined in Rule 
11.24(a)(3) as an order that consists of non-displayed interest on 
the Exchange that is priced better than the Protected NBB or 
Protected NBO by at least $0.001 and that is identified as such. See 
Rule 11.24(a)(3).
    \13\ See RPI Approval Order, supra note 5 at 71655.
    \14\ Concurrently with this filing, the Exchange has submitted a 
request for an extension of the exemption under Regulation NMS Rule 
612 previously granted by the Commission that permits it to accept 
and rank the RPI orders in sub-penny increments. See Letter from 
Anders Franzon, SVP, Associate General Counsel, Bats BYX Exchange, 
Inc. to Brent J. Fields, Secretary, Securities and Exchange 
Commission dated August 7, 2017.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\15\ In particular, 
the Exchange believes the proposed change furthers the objectives of 
Section 6(b)(5) of the Act,\16\ in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that 
extending the pilot period for the RPI Program is consistent with these 
principles because the Program is reasonably designed to attract retail 
order flow to the exchange environment, while helping to ensure that 
retail investors benefit from the better price that liquidity providers 
are willing to give their orders. Additionally, as previously stated, 
the competition promoted by the Program may facilitate the price 
discovery process and potentially generate additional investor interest 
in trading securities. The extension of the pilot period will allow the 
Commission and the Exchange to continue to monitor the Program for its 
potential effects on public price discovery, and on the broader market 
structure.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
extends an established pilot program for 12 months, thus allowing the 
RPI Program to enhance competition for retail order flow and contribute 
to the public price discovery process.

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

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, become operative for 30 days from the date on which it was 
filed or such shorter time as the Commission may designate it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \17\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\18\ the Exchange has 
designated this rule filing as non-controversial.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    The Exchange has requested the Commission waive the standard five-
day pre-filing and 30-day operative delay requirements as specified in 
Rule 19b-4(f)(6)(iii) \19\ so that BatsBYX's RPI Program can continue 
to operate with limited interruption. The Commission waives the 5-day 
pre-filing requirement. In addition, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will allow the Exchange to 
reinstate the RPI Program on a pilot basis immediately. For these 
reasons, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\20\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BatsBYX-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-BatsBYX-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 such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBYX-2017-18 and should be 
submitted on or before September 6, 2017


[[Page 38962]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-17273 Filed 8-15-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    38960                       Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices

                                                    printing in the Commission’s Public                     I. Self-Regulatory Organization’s                       NBO’’, and together with the Protected
                                                    Reference Room, 100 F Street NE.,                       Statement of the Terms of Substance of                  NBB, the ‘‘Protected NBBO’’).8
                                                    Washington, DC 20549, on official                       the Proposed Rule Change                                  The Program was approved by the
                                                    business days between the hours of                                                                              Commission on a pilot basis running
                                                                                                               The Exchange filed a proposal to                     one-year from the date of
                                                    10:00 a.m. and 3:00 p.m. Copies of the                  extend the pilot period for the
                                                    filing also will be available for                                                                               implementation.9 The Commission
                                                                                                            Exchange’s Retail Price Improvement                     approved the Program on November 27,
                                                    inspection and copying at the principal                 (‘‘RPI’’) Program (the ‘‘Program’’), which
                                                    office of the Exchange. All comments                                                                            2012.10 The Exchange implemented the
                                                                                                            was set to expire on July 31, 2017, for                 Program on January 11, 2013, and has
                                                    received will be posted without change;                 12 months, to expire on July 31, 2018.                  extended the pilot period four times.11
                                                    the Commission does not edit personal                      The text of the proposed rule change                 The pilot period for the Program expired
                                                    identifying information from                            is available at the Exchange’s Web site                 on July 31, 2017. The lapse of the pilot
                                                    submissions. You should submit only                     at www.bats.com, at the principal office                was inadvertent and this filing seeks to
                                                    information that you wish to make                       of the Exchange, and at the                             reinstate the pilot under the same terms
                                                    available publicly. All submissions                     Commission’s Public Reference Room.                     as the original pilot.
                                                    should refer to File Number SR–MIAX–
                                                    2017–39 and should be submitted on or                   II. Self-Regulatory Organization’s                      Proposal To Extend the Operation of the
                                                    before September 6, 2017.                               Statement of the Purpose of, and                        Program
                                                                                                            Statutory Basis for, the Proposed Rule                     The Exchange established the RPI
                                                      For the Commission, by the Division of                Change
                                                    Trading and Markets, pursuant to delegated
                                                                                                                                                                    Program in an attempt to attract retail
                                                    authority.55                                              In its filing with the Commission, the                order flow to the Exchange by
                                                                                                            Exchange included statements                            potentially providing price
                                                    Robert W. Errett,                                                                                               improvement to such order flow. The
                                                    Deputy Secretary.
                                                                                                            concerning the purpose of and basis for
                                                                                                            the proposed rule change and discussed                  Exchange believes that the Program
                                                    [FR Doc. 2017–17272 Filed 8–15–17; 8:45 am]
                                                                                                            any comments it received on the                         promotes competition for retail order
                                                    BILLING CODE 8011–01–P                                  proposed rule change. The text of these                 flow by allowing Exchange members to
                                                                                                            statements may be examined at the                       submit Retail Price Improvement Orders
                                                                                                            places specified in Item IV below. The                  (‘‘RPI Orders’’) 12 to interact with Retail
                                                    SECURITIES AND EXCHANGE                                 Exchange has prepared summaries, set                    Orders. Such competition has the ability
                                                    COMMISSION                                              forth in Sections A, B, and C below, of                    8 The term Protected Quotation is defined in BYX
                                                                                                            the most significant parts of such                      Rule 1.5(t) and has the same meaning as is set forth
                                                    [Release No. 34–81368; File No. SR–                     statements.                                             in Regulation NMS Rule 600(b)(58). The terms
                                                    BatsBYX–2017–18]                                                                                                Protected NBB and Protected NBO are defined in
                                                                                                            A. Self-Regulatory Organization’s                       BYX Rule 1.5(s). The Protected NBB is the best-
                                                    Self-Regulatory Organizations; Bats                     Statement of the Purpose of, and                        priced protected bid and the Protected NBO is the
                                                                                                            Statutory Basis for, the Proposed Rule                  best-priced protected offer. Generally, the Protected
                                                    BYX Exchange, Inc.; Notice of Filing                                                                            NBB and Protected NBO and the national best bid
                                                    and Immediate Effectiveness of a                        Change                                                  (‘‘NBB’’) and national best offer (‘‘NBO’’, together
                                                    Proposed Rule Change to Rule 11.24,                                                                             with the NBB, the ‘‘NBBO’’) will be the same.
                                                                                                            1. Purpose                                              However, a market center is not required to route
                                                    Retail Price Improvement Program, To                                                                            to the NBB or NBO if that market center is subject
                                                    Extend the Pilot Period                                    In November 2012, the Commission                     to an exception under Regulation NMS Rule
                                                                                                            approved the RPI Program on a pilot                     611(b)(1) or if such NBB or NBO is otherwise not
                                                    August 10, 2017.                                        basis.5 The Program is designed to                      available for an automatic execution. In such case,
                                                                                                            attract retail order flow to the Exchange,              the Protected NBB or Protected NBO would be the
                                                       Pursuant to Section 19(b)(1) of the                                                                          best-priced protected bid or offer to which a market
                                                                                                            and allows such order flow to receive
                                                    Securities Exchange Act of 1934 (the                                                                            center must route interest pursuant to Regulation
                                                                                                            potential price improvement. The                        NMS Rule 611.
                                                    ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                                                                            Program is currently limited to trades                     9 See RPI Approval Order, supra note 5 at 71652.
                                                    notice is hereby given that on August 8,
                                                                                                            occurring at prices equal to or greater                    10 Id.
                                                    2017, Bats BYX Exchange, Inc. (the                                                                                 11 See Securities Exchange Act Release Nos.
                                                                                                            than $1.00 per share. Under the
                                                    ‘‘Exchange’’ or ‘‘BYX’’) filed with the                 Program, all Exchange Users 6 are                       71249 (January 7, 2014), 79 FR 2229 (January 13,
                                                    Securities and Exchange Commission                                                                              2014) (SR–BYX–2014–001) (Notice of Filing and
                                                                                                            permitted to provide potential price                    Immediate Effectiveness of a Proposed Rule Change
                                                    (‘‘Commission’’) the proposed rule                      improvement for Retail Orders 7 in the                  to Extend the Pilot Period for the Retail Price
                                                    change as described in Items I and II                   form of non-displayed interest that is                  Improvement Program); 74111 (January 22, 2015),
                                                    below, which Items have been prepared                   better than the national best bid that is               80 FR 4598 (January 28, 2015) (SR–BYX–2015–05)
                                                    by the Exchange. The Exchange has                                                                               (Notice of Filing and Immediate Effectiveness of a
                                                                                                            a Protected Quotation (‘‘Protected                      Proposed Rule Change to Extend the Pilot Period for
                                                    designated this proposal as a ‘‘non-                    NBB’’) or the national best offer that is               BATS Y-Exchange, Inc.’s Retail Price Improvement
                                                    controversial’’ proposed rule change                    a Protected Quotation (‘‘Protected                      (‘‘RPI’’) Program for 12 Months, To Expire on
                                                    pursuant to Section 19(b)(3)(A) of the                                                                          January 31, 2016); 76965 (January 22, 2016), 81 FR
                                                                                                                                                                    4682 (January 27, 2016) (SR–BYX–2016–01) (Notice
                                                    Act 3 and Rule 19b–4(f)(6)(iii)                           5 See Securities Exchange Act Release No. 68303
                                                                                                                                                                    of Filing and Immediate Effectiveness of a Proposed
                                                    thereunder,4 which renders it effective                 (November 27, 2012), 77 FR 71652 (December 3,           Rule Change to Rule 11.24, Retail Price
                                                    upon filing with the Commission. The                    2012) (‘‘RPI Approval Order’’) (SR–BYX–2012–019).       Improvement Program, To Extend the Pilot Period);
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                              6 A ‘‘User’’ is defined in BYX Rule 1.5(cc) as any    78180 (June 28, 2016), 81 FR 43306 (July 1, 2016)
                                                    Commission is publishing this notice to
                                                                                                            member or sponsored participant of the Exchange         (SR–BYX–2016–15) (Notice of Filing and Immediate
                                                    solicit comments on the proposed rule                   who is authorized to obtain access to the System.       Effectiveness of a Proposed Rule Change to Rule
                                                    change from interested persons.                           7 A ‘‘Retail Order’’ is defined in Rule 11.24(a)(2)   11.24, Retail Price Improvement Program, To
                                                                                                            as an agency order that originates from a natural       Extend the Pilot Period).
                                                      55 17                                                 person and is submitted to the Exchange by a RMO,          12 A ‘‘Retail Price Improvement Order’’ is defined
                                                            CFR 200.30–3(a)(12).
                                                      1 15
                                                                                                            provided that no change is made to the terms of the     in Rule 11.24(a)(3) as an order that consists of non-
                                                           U.S.C. 78s(b)(1).                                order with respect to price or side of market and       displayed interest on the Exchange that is priced
                                                      2 17 CFR 240.19b–4.
                                                                                                            the order does not originate from a trading             better than the Protected NBB or Protected NBO by
                                                      3 15 U.S.C. 78s(b)(3)(A).
                                                                                                            algorithm or any computerized methodology. See          at least $0.001 and that is identified as such. See
                                                      4 17 CFR 240.19b–4(f)(6)(iii).                        Rule 11.24(a)(2).                                       Rule 11.24(a)(3).



                                               VerDate Sep<11>2014   18:33 Aug 15, 2017   Jkt 241001   PO 00000   Frm 00086   Fmt 4703   Sfmt 4703   E:\FR\FM\16AUN1.SGM    16AUN1


                                                                                Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices                                                  38961

                                                    to promote efficiency by facilitating the                discovery, and on the broader market                 IV. Solicitation of Comments
                                                    price discovery process and generating                   structure.
                                                    additional investor interest in trading                                                                         Interested persons are invited to
                                                                                                             B. Self-Regulatory Organization’s                    submit written data, views and
                                                    securities, thereby promoting capital
                                                                                                             Statement on Burden on Competition                   arguments concerning the foregoing,
                                                    formation. The Exchange believes that
                                                    extending the pilot is appropriate                          The Exchange does not believe that                including whether the proposal is
                                                    because it will allow the Exchange and                   the proposed rule change will impose                 consistent with the Act. Comments may
                                                    the Commission additional time to                        any burden on competition that is not                be submitted by any of the following
                                                    gather and analyze data regarding the                    necessary or appropriate in furtherance              methods:
                                                    Program that the Exchange has                            of the purposes of the Act. The
                                                                                                             proposed rule change extends an                      Electronic Comments
                                                    committed to provide.13 As such, the
                                                    Exchange believes that it is appropriate                 established pilot program for 12 months,               • Use the Commission’s Internet
                                                    to extend the current operation of the                   thus allowing the RPI Program to                     comment form (http://www.sec.gov/
                                                    Program.14 Through this filing, the                      enhance competition for retail order                 rules/sro.shtml); or
                                                    Exchange seeks to extend the current                     flow and contribute to the public price
                                                    pilot period of the Program until July                   discovery process.                                     • Send an email to rule-comments@
                                                    31, 2018.                                                                                                     sec.gov. Please include File No. SR–
                                                                                                             C. Self-Regulatory Organization’s                    BatsBYX–2017–18 on the subject line.
                                                    2. Statutory Basis                                       Statement on Comments on the
                                                                                                             Proposed Rule Change Received From                   Paper Comments
                                                       The Exchange believes that its                        Members, Participants or Others
                                                    proposal is consistent with the                                                                                 • Send paper comments in triplicate
                                                    requirements of the Act and the rules                      The Exchange has not solicited, and                to Secretary, Securities and Exchange
                                                    and regulations thereunder that are                      does not intend to solicit, comments on              Commission, 100 F Street NE.,
                                                    applicable to a national securities                      this proposed rule change. The                       Washington, DC 20549–1090.
                                                    exchange, and, in particular, with the                   Exchange has not received any written
                                                    requirements of Section 6(b) of the                      comments from Members or other                       All submissions should refer to File No.
                                                    Act.15 In particular, the Exchange                       interested parties.                                  SR-BatsBYX–2017–18. This file number
                                                    believes the proposed change furthers                                                                         should be included on the subject line
                                                                                                             III. Date of Effectiveness of the                    if email is used. To help the
                                                    the objectives of Section 6(b)(5) of the                 Proposed Rule Change and Timing for
                                                    Act,16 in that it is designed to prevent                                                                      Commission process and review your
                                                                                                             Commission Action
                                                    fraudulent and manipulative acts and                                                                          comments more efficiently, please use
                                                    practices, to promote just and equitable                    Because the foregoing proposed rule               only one method. The Commission will
                                                    principles of trade, to foster cooperation               change does not: (A) Significantly affect            post all comments on the Commission’s
                                                    and coordination with persons engaged                    the protection of investors or the public            Internet Web site (http://www.sec.gov/
                                                    in facilitating transactions in securities,              interest; (B) impose any significant                 rules/sro.shtml). Copies of the
                                                    and to remove impediments to and                         burden on competition; and (C) by its                submission, all subsequent
                                                    perfect the mechanism of a free and                      terms, become operative for 30 days                  amendments, all written statements
                                                    open market and a national market                        from the date on which it was filed or               with respect to the proposed rule
                                                    system. The Exchange believes that                       such shorter time as the Commission                  change that are filed with the
                                                    extending the pilot period for the RPI                   may designate it has become effective
                                                                                                                                                                  Commission, and all written
                                                    Program is consistent with these                         pursuant to Section 19(b)(3)(A) of the
                                                                                                                                                                  communications relating to the
                                                    principles because the Program is                        Act 17 and paragraph (f)(6) of Rule 19b–
                                                                                                             4 thereunder,18 the Exchange has                     proposed rule change between the
                                                    reasonably designed to attract retail                                                                         Commission and any person, other than
                                                    order flow to the exchange environment,                  designated this rule filing as non-
                                                                                                             controversial.                                       those that may be withheld from the
                                                    while helping to ensure that retail
                                                                                                                The Exchange has requested the                    public in accordance with the
                                                    investors benefit from the better price
                                                                                                             Commission waive the standard five-                  provisions of 5 U.S.C. 552, will be
                                                    that liquidity providers are willing to
                                                                                                             day pre-filing and 30-day operative                  available for Web site viewing and
                                                    give their orders. Additionally, as
                                                    previously stated, the competition                       delay requirements as specified in Rule              printing in the Commission’s Public
                                                    promoted by the Program may facilitate                   19b–4(f)(6)(iii) 19 so that BatsBYX’s RPI            Reference Room, 100 F Street NE.,
                                                    the price discovery process and                          Program can continue to operate with                 Washington, DC 20549, on official
                                                    potentially generate additional investor                 limited interruption. The Commission                 business days between the hours of
                                                    interest in trading securities. The                      waives the 5-day pre-filing requirement.             10:00 a.m. and 3:00 p.m. Copies of such
                                                    extension of the pilot period will allow                 In addition, the Commission believes                 filing will also be available for
                                                    the Commission and the Exchange to                       that waiving the 30-day operative delay              inspection and copying at the principal
                                                    continue to monitor the Program for its                  is consistent with the protection of                 office of the Exchange. All comments
                                                    potential effects on public price                        investors and the public interest                    received will be posted without change;
                                                                                                             because it will allow the Exchange to                the Commission does not edit personal
                                                      13 See  RPI Approval Order, supra note 5 at 71655.     reinstate the RPI Program on a pilot                 identifying information from
                                                      14 Concurrently   with this filing, the Exchange has   basis immediately. For these reasons,                submissions. You should submit only
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    submitted a request for an extension of the              the Commission designates the proposal               information that you wish to make
                                                    exemption under Regulation NMS Rule 612                  to be effective and operative upon filing
                                                    previously granted by the Commission that permits                                                             available publicly. All submissions
                                                    it to accept and rank the RPI orders in sub-penny
                                                                                                             with the Commission.20                               should refer to File No. SR–BatsBYX–
                                                    increments. See Letter from Anders Franzon, SVP,                                                              2017–18 and should be submitted on or
                                                                                                               17 15 U.S.C. 78s(b)(3)(A).
                                                    Associate General Counsel, Bats BYX Exchange,
                                                    Inc. to Brent J. Fields, Secretary, Securities and         18 17 CFR 240.19b–4.
                                                                                                                                                                  before September 6, 2017
                                                    Exchange Commission dated August 7, 2017.                  19 17 CFR 240.19b–4(f)(6)(iii).
                                                       15 15 U.S.C. 78f(b).                                    20 For purposes only of waiving the 30-day         proposed rule’s impact on efficiency, competition,
                                                       16 15 U.S.C. 78f(b)(5).                               operative delay, the Commission has considered the   and capital formation. See 15 U.S.C. 78c(f).



                                               VerDate Sep<11>2014   18:33 Aug 15, 2017   Jkt 241001   PO 00000   Frm 00087   Fmt 4703   Sfmt 4703   E:\FR\FM\16AUN1.SGM   16AUN1


                                                    38962                       Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices

                                                      For the Commission, by the Division of                  II. Self-Regulatory Organization’s                     transact a greater number of SPY
                                                    Trading and Markets, pursuant to delegated                Statement of the Purpose of, and                       Complex PIXL Orders while also
                                                    authority.21                                              Statutory Basis for, the Proposed Rule                 incentivizing members or member
                                                    Robert W. Errett,                                         Change                                                 organizations to submit Customer order
                                                    Deputy Secretary.                                                                                                flow on Phlx.
                                                                                                                 In its filing with the Commission, the
                                                    [FR Doc. 2017–17273 Filed 8–15–17; 8:45 am]
                                                                                                              Exchange included statements                              Second, the Exchange proposes to
                                                    BILLING CODE 8011–01–P                                    concerning the purpose of and basis for                increase the Complex PIXL (excluding
                                                                                                              the proposed rule change and discussed                 SPY Options rebate it offers to Phlx
                                                                                                              any comments it received on the                        members and member organizations that
                                                    SECURITIES AND EXCHANGE                                   proposed rule change. The text of these                qualify for Section B, Customer Rebate
                                                    COMMISSION                                                statements may be examined at the                      Tiers 2 through 6 or qualify for the
                                                    [Release No. 34–81370; File No. SR–Phlx–                  places specified in Item IV below. The                 Monthly Firm Fee Cap. Presently, the
                                                    2017–64]                                                  Exchange has prepared summaries, set                   Exchange offers a rebate of $0.10 per
                                                                                                              forth in sections A, B, and C below, of                contract for all Complex PIXL Orders
                                                    Self-Regulatory Organizations;                            the most significant aspects of such                   (excluding SPY Options) greater than
                                                    NASDAQ PHLX LLC; Notice of Filing                         statements.                                            499 contracts, provided the member or
                                                    and Immediate Effectiveness of                                                                                   member organization executes an
                                                    Proposed Rule Change To Amend the                         A. Self-Regulatory Organization’s                      average of 2,500 contracts per day of
                                                    Exchange’s Pricing Schedule                               Statement of the Purpose of, and                       Complex SPY PIXL Orders in a month.
                                                                                                              Statutory Basis for, the Proposed Rule                 The Exchange proposes to increase that
                                                    August 10, 2017.                                          Change                                                 rebate to $0.12 per contract. In doing so,
                                                       Pursuant to Section 19(b)(1) of the                                                                           the Exchange desires to incentivize
                                                    Securities Exchange Act of 1934                           1. Purpose
                                                                                                                                                                     members and member organizations to
                                                    (‘‘Act’’),1 and Rule 19b–4 thereunder,2                      The purpose of the proposed rule                    transact a greater number of Complex
                                                    notice is hereby given that on July 31,                   change is to amend the Exchange’s                      PIXL Orders while also incentivizing
                                                    2017 NASDAQ PHLX LLC (‘‘Phlx’’ or                         Pricing Schedule at Section I, entitled                members and member organizations to
                                                    ‘‘Exchange’’) filed with the Securities                   ‘‘Rebates and Fees for Adding and                      submit Customer order flow on Phlx to
                                                    and Exchange Commission (‘‘SEC’’ or                       Removing Liquidity in SPY’’ and                        obtain the $0.12 rebate on all Complex
                                                    ‘‘Commission’’) the proposed rule                         specifically, the section that pertains to             PIXL Orders (excluding SPY Options).
                                                    change as described in Items I, II, and                   PIXL Executions in Standard and Poor’s
                                                    III, below, which Items have been                         Depositary Receipts/SPDRs (‘‘SPY’’).4                  2. Statutory Basis
                                                    prepared by the Exchange. The                             The Exchange also proposes to amend                       The Exchange believes that its
                                                    Commission is publishing this notice to                   PIXL Pricing in Section IV, Part A,                    proposal is consistent with Section 6(b)
                                                    solicit comments on the proposed rule                     entitled ‘‘PIXL Pricing’’ for all other                of the Act,6 in general, and furthers the
                                                    change from interested persons.                           Multiply-Listed options symbols.                       objectives of Sections 6(b)(4) and 6(b)(5)
                                                                                                                 First, the Exchange proposes to                     of the Act,7 in particular, in that it
                                                    I. Self-Regulatory Organization’s                         increase the SPY Complex PIXL rebate
                                                    Statement of the Terms of Substance of                                                                           provides for the equitable allocation of
                                                                                                              it offers Phlx members or member                       reasonable dues, fees and other charges
                                                    the Proposed Rule Change                                  organizations that qualify for Section B,              among members and issuers and other
                                                       The Exchange proposes to amend the                     Customer Rebate Tiers 5 2 through 6 or                 persons using any facility, and is not
                                                    Exchange’s Pricing Schedule at Section                    qualify for the Monthly Firm Fee Cap.                  designed to permit unfair
                                                    I, entitled ‘‘Rebates and Fees for Adding                 Presently, the Exchange offers a rebate                discrimination between customers,
                                                    and Removing Liquidity in SPY,’’ and                      of $0.10 per contract for all SPY                      issuers, brokers, or dealers.
                                                    Section IV, Part A entitled ‘‘PIXL                        Complex PIXL Orders greater than 499                      The Commission and the courts have
                                                    Pricing’’ to amend pricing related to                     contracts, provided the member or                      repeatedly expressed their preference
                                                    PIXL 3 executions.                                        member organization executes an                        for competition over regulatory
                                                       While these amendments are effective                   average of 2,500 contracts per day of                  intervention in determining prices,
                                                    upon filing, the Exchange has                             SPY Complex PIXL Orders in a month.                    products, and services in the securities
                                                    designated the proposed amendments to                     The Exchange proposes to increase that                 markets. In Regulation NMS, while
                                                    be operative on August 1, 2017.                           rebate to $0.12 per contract. In doing so,             adopting a series of steps to improve the
                                                       The text of the proposed rule change                   the Exchange desires to incentivize                    current market model, the Commission
                                                    is available on the Exchange’s Web site                   members or member organizations to                     highlighted the importance of market
                                                    at http://nasdaqphlx.cchwallstreet.                                                                              forces in determining prices and SRO
                                                    com/, at the principal office of the                        4 Options overlying Standard and Poor’s
                                                                                                                                                                     revenues and, also, recognized that
                                                    Exchange, and at the Commission’s                         Depositary Receipts/SPDRs (‘‘SPY’’) are based on
                                                                                                                                                                     current regulation of the market system
                                                    Public Reference Room.                                    the SPDR exchange-traded fund (‘‘ETF’’), which is
                                                                                                              designed to track the performance of the S&P 500       ‘‘has been remarkably successful in
                                                      21 17
                                                                                                              Index.                                                 promoting market competition in its
                                                            CFR 200.30–3(a)(12).                                5 Section B of the Pricing Schedule contains
                                                      1 15 U.S.C. 78s(b)(1).
                                                                                                                                                                     broader forms that are most important to
                                                                                                              Customer Rebate Tiers which are calculated by
                                                      2 17 CFR 240.19b–4.
                                                                                                              totaling Customer volume in Multiply Listed
                                                                                                                                                                     investors and listed companies.’’ 8
                                                      3 PIXLTM is the Exchange’s price improvement            Options (including SPY) that are electronically-          Likewise, in NetCoalition v. Securities
                                                                                                                                                                     and Exchange Commission 9
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    mechanism known as Price Improvement XL or                delivered and executed, except volume associated
                                                    PIXL. A member or member organization may                 with electronic QCC Orders, as defined in Exchange     (‘‘NetCoalition’’) the D.C. Circuit upheld
                                                    electronically submit for execution an order it           Rule 1080(o). Rebates are paid on Customer Rebate
                                                    represents as agent on behalf of a public customer,       Tiers according to certain categories. Members and       6 15
                                                    broker-dealer, or any other entity (‘‘PIXL Order’’)       member organizations under Common Ownership                    U.S.C. 78f(b).
                                                                                                                                                                       7 15  U.S.C. 78f(b)(4) and (5).
                                                    against principal interest or against any other order     may aggregate their Customer volume for purposes
                                                                                                                                                                        8 Securities Exchange Act Release No. 51808
                                                    (except as provided in Rule 1080(n)(i)(E)) it             of calculating the Customer Rebate Tiers and
                                                    represents as agent (‘‘Initiating Order’’), provided it   receiving rebates. Affiliated Entities may aggregate   (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
                                                    submits the PIXL order for electronic execution into      their Customer volume for purposes of calculating      (‘‘Regulation NMS Adopting Release’’).
                                                    the PIXL Auction pursuant to Rule 1080. See               the Customer Rebate Tiers and receiving rebates.          9 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.

                                                    Exchange Rule 1080(n).                                    See Section B of the Pricing Schedule.                 2010).



                                               VerDate Sep<11>2014    18:33 Aug 15, 2017   Jkt 241001   PO 00000   Frm 00088   Fmt 4703   Sfmt 4703   E:\FR\FM\16AUN1.SGM     16AUN1



Document Created: 2017-08-16 10:27:05
Document Modified: 2017-08-16 10:27:05
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 38960 

2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR