82 FR 4437 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Fees for Connectivity and Its Communication and Routing Service Known as Bats Connect
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 9 (January 13, 2017)
Federal Register Volume 82, Issue 9 (January 13, 2017)
| Page Range | 4437-4441 | |
| FR Document | 2017-00611 |
[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)] [Notices] [Pages 4437-4441] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-00611] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79762; File No. SR-BatsBZX-2016-90] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Fees for Connectivity and Its Communication and Routing Service Known as Bats Connect January 9, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 27, 2016, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 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. --------------------------------------------------------------------------- \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 BZX Rules 15.1(a) and (c) to modify its fees for its equity options platform (``BZX Options'') for physical ports and for the use of a communication and routing service known as Bats Connect. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- [[Page 4438]] 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 the fee schedule for BZX Options to modify its fees for physical ports and for the use of a communication and routing service known as Bats Connect. Each of these proposed changes are described below. Physical Ports A physical port is utilized by a Member or non-Member to connect to the Exchange at the data centers where the Exchange's servers are located. The Exchange currently maintains a presence in two third-party data centers: (i) The primary data center where the Exchange's business is primarily conducted on a daily basis, and (ii) a secondary data center, which is predominantly maintained for business continuity purposes. The Exchange currently assesses the following physical connectivity fees for Members and non-Members on a monthly basis: 2,000 per physical port that connects to the System \6\ via 1 gigabyte circuit; and 4,000 per physical port that connects to the System via 10 gigabyte circuit. The Exchange proposes to increase the fee per physical port that connects to the System via a 10 gigabyte circuit from 4,000 per month to 6,000 per month in order cover its increased infrastructure costs associated with establishing physical ports to connect to the Exchange's Systems and enable it to continue to maintain and improve its market technology and services. The Exchange does not propose to amend the fee for a 1 gigabyte circuit, which will remain $2,000 per month. --------------------------------------------------------------------------- \6\ The term ``System'' is defined as ``the automated trading system used by BZX Options for the trading of options contracts.'' See Exchange Rule 16.1(a)(59). --------------------------------------------------------------------------- Bats Connect The Exchange proposes to increase select fees related to the use of Bats Connect. Bats Connect is offered by the Exchange on a voluntary basis in a capacity similar to a vendor.\7\ In sum, Bats Connect is a communication service that provides subscribers an additional means to receive market data from and route orders to any destination connected to the Exchange's network. Bats Connect does not provide any advantage to subscribers for connecting to the Exchange's affiliates \8\ as compared to other methods of connectivity. The servers of the subscriber need not be located in the same facilities as the Exchange in order to subscribe to Bats Connect. Subscribers may also seek to utilize Bats Connect in the event of a market disruption where other alternative connection methods become unavailable. --------------------------------------------------------------------------- \7\ See Exchange Rule 13.8. \8\ The Exchange's affiliated exchanges are Bats EDGX Exchange, Inc. (``EDGX''), Bats EDGA Exchange, Inc. (``EDGA''), and Bats BYX Exchange, Inc. (``BYX''). --------------------------------------------------------------------------- The Exchange charges a monthly connectivity fee to subscribers utilizing Bats Connect to route orders to other exchanges and broker- dealers that are connected to the Exchange's network via unicast access. The amount of the connectivity fee varies based solely on the bandwidth selected by the subscriber. Specifically, as set forth under the Unicast Access--Order Entry section of the fee schedule, the Exchange charges $350 for 1 Mb, $700 for 5 Mb, $950 for 10 Mb, $1,500 for 25 Mb,$2,500 for 50 Mb, and $3,500 for 100 Mb. The Exchange proposes to increase those fees as follows: $500 for 1 Mb, $1,000 for 5 Mb, and $1,250 for 10 Mb. The proposed increases are designed to cover increased costs related to hardware, installation, and testing, as well as increased expenses involved in maintaining and managing the service. The Exchange does not propose to increase the fees for the 25 Mb, 50 Mb and 100 Mb connections as those fees will remain $1,500, $2,500, and $3,500, respectively. Bats Connect also allows subscribers to receive market data feeds from the exchanges connected to the Exchange's network. In such case, the subscriber pays the Exchange a connectivity fee, which are set forth under the Market Data Connectivity section of the fee schedule and vary based solely on the amount of bandwidth required to transmit the selected data product to the subscriber.\9\ The proposed connectivity fees currently range from no charge to $11,500 based on the market data product the subscriber selects. The Exchange proposes to increase select connectivity fees for market data as follows: --------------------------------------------------------------------------- \9\ Subscribers pays any fees charged by the exchange providing the market data feed directly to that exchange. ------------------------------------------------------------------------ Data feed Current fee Proposed fee ------------------------------------------------------------------------ UQDF/UTDF/OMDF.......................... $650 $1,200 CQS/CTS................................. 1,000 1,400 OPRA.................................... 3,500 4,500 Nasdaq TotalView........................ 1,300 1,500 Nasdaq BX TotalView..................... 650 1,000 Nasdaq PSX TotalView.................... 350 750 NYSE Integrated......................... 11,500 14,500 NYSE ArcaBook........................... 1,000 1,250 NYSE MKT OpenBook Ultra................. 150 500 NYSE Alerts............................. 250 500 NYSE Imbalances......................... 100 500 NYSE Arca Trades........................ 250 500 BBDS/TDDS............................... 100 500 ------------------------------------------------------------------------ [[Page 4439]] The proposed increases are designed to allow the Exchange to cover the increased costs related to the amount of bandwidth required to provide connectivity to receive market data as well as the costs of maintaining that infrastructure. The Exchange also charges a discounted fee of $4,160 per month for subscribers who purchase connectivity to a bundle of select market data products, known as the U.S. Equities Select + SIP Bundle. The following market data products are included in the bundle: UQDF/UTDF/OMDF, CQS/ CTS, Nasdaq TotalView, Nasdaq BX TotalView, Nasdaq PSX TotalView, NYSE ArcaBook, NYSE MKT OpenBook Ultra, and BBDS/TTDS.\10\ Absent the discount, a subscriber purchasing connectivity through Bats Connect for each of these market data products would currently pay a total monthly fee of $5,200. Instead, a subscriber who purchases connectivity to each of the above market data products is charged a monthly fee of $4,160, which represents a 20% discount. The Exchange proposes to add NYSE OpenBook Ultra to the bundle. Also, in light of the proposed changes outlined above, the Exchange proposes to increase the discounted rate of the bundle to $5,910 per month, which would now represent a 40% discount from the rate of $9,850 a subscriber purchasing connectivity through Bats Connect for each of these market data products would be charged under the proposed rule change. --------------------------------------------------------------------------- \10\ The Exchange also proposes to correct a typographical error in referencing BBDS/TDDS in its description of the U.S. Equity Select + SIP bundle. --------------------------------------------------------------------------- Lastly, the Exchange proposes to charge a discounted fee of $6,390 per month for subscribers who purchase connectivity to the OPRA, UQDF/ UTDF/OMDF, and CQS/CTS data feeds. Absent the discount, a subscriber purchasing connectivity through Bats Connect for each of these market data products would pay a total monthly fee of $7,100. Instead, a subscriber who purchases connectivity to each of the above market data products is charged a monthly fee of $6,390, which represents a 10% discount. Implementation Date The Exchange proposes to implement this amendment to its fee schedule on January 3, 2017. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,\11\ in general, and furthers the objectives of Section 6(b)(4),\12\ 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. The proposed rule change reflects a competitive pricing structure designed to incent market participants to direct their order flow to the Exchange. The Exchange believes that the proposed rates are equitable and non-discriminatory in that they apply uniformly to all Members. The Exchange believes the fees and credits remain competitive with those charged by other venues and therefore continue to be reasonable and equitably allocated to Members. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f. \12\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes that the proposal represents an equitable allocation of reasonable dues, fees, and other charges as its fees for physical connectivity are reasonably constrained by competitive alternatives. If a particular exchange charges excessive fees for connectivity, affected Members and non-Members may opt to terminate their connectivity arrangements with that exchange, and adopt a possible range of alternative strategies, including routing to the applicable exchange through another participant or market center or taking that exchange's data indirectly. Accordingly, if the Exchange charges excessive fees, it would stand to lose not only connectivity revenues but also revenues associated with the execution of orders routed to it, and, to the extent applicable, market data revenues. The Exchange believes that this competitive dynamic imposes powerful restraints on the ability of any exchange to charge unreasonable fees for connectivity. Furthermore, the proposed rule change is also an equitable allocation of reasonable dues, fees, and other charges as the Exchange believes that the increased fees obtained will enable it to cover its increased infrastructure costs associated with establishing physical ports to connect to the Exchange's Systems. The additional revenue from the increased fees will also enable the Exchange to continue to maintain and improve its market technology and services. Physical Ports The Exchange believes that the proposed fees for a 10 gigabyte circuit of $6,000 per month is reasonable in that they are less than analogous fees charged by the Nasdaq Stock Market LLC (``Nasdaq'') and NYSE Arca, Inc. (``Arca''), which range from $10,000-$15,000 per month for 10 gigabyte circuits.\13\ The Exchange believes that the proposed rates are equitable and non-discriminatory in that they apply uniformly to all Members and non-Members. Members and non-Members will continue to choose whether they want more than one physical port and choose the method of connectivity based on their specific needs. All Exchange Members that voluntarily select various service options will be charged the same amount for the same services. As is true of all physical connectivity, all Members and non-Members have the option to select any connectivity option, and there is no differentiation with regard to the fees charged for the service. --------------------------------------------------------------------------- \13\ See Nasdaq Rule 7034(b) and the Co-Location section of the NYSE Arca fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (dated December 2, 2016). --------------------------------------------------------------------------- Bats Connect The Exchange also believes that its proposed fees for Bats Connect provide for the equitable allocation of reasonable dues, fees and other charges among members and other persons using its facilities. First, the Exchange charges a connectivity fee to subscribers utilizing Bats Connect to route orders to other exchanges and market centers that are connected to the Exchange's network, which varies based solely on the amount of bandwidth selected by the subscriber. The proposed increased connectivity fees remain reasonable and competitive as compared to similar fees charged by other exchanges. For purposes of order routing, the Exchange proposes to now charge $500 for 1 Mb, $1,000 for 5 Mb, and $1,250 for 10 Mb. The New York Stock Exchange, Inc. (``NYSE'') currently charges $300 for 1 Mb, $700 for 5 Mb, and $900 for 10 Mb.\14\ In addition, the proposed rates continue to be less than what a subscriber would pay to connect directly to another exchange.\15\ The Exchange notes that, overall, the connectivity fee for routing of orders to other market centers proposed by the [[Page 4440]] Exchange is similar to that charged by the NYSE. --------------------------------------------------------------------------- \14\ See Section 3.6.1 of NYSE's SFTI Americas Product and Service List available at http://www.nyxdata.com/docs/connectivity. \15\ See e.g., Nasdaq Rule 7034(b) and the NYSE Arca fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (dated December 2, 2016). --------------------------------------------------------------------------- Second, with regard to utilizing Bats Connect to receive market data products from other exchanges, the Exchange only charges subscribers a connectivity fee, the amount of which is based solely on the amount of bandwidth required to transmit that specific data product to the subscribers. The Exchange believes it is necessary to increase the rates for select market data feeds as described herein to address changes in bandwidth necessary to receive such feeds. The increased fees will also enable the Exchange to continue to cover the increased infrastructure costs while also enabling it to continue to maintain and improve the service. The amounts of the connectivity fees continue to be reasonable as compared to similar fees charged by other exchanges. For example, for market data connectivity, Nasdaq charges $1,412 per month for CQS/CTS data feed, and the Exchange proposes to charge $1,400 per month connectivity for CQS/CTS data feed.\16\ --------------------------------------------------------------------------- \16\ See Nasdaq Rule 7034 (setting forth Nasdaq's connectivity fees for receipt of third party market data products). --------------------------------------------------------------------------- The Exchange believes it is reasonable to offer such discounted pricing to subscribers who purchase connectivity to a bundle of market data products as it would enable them to reduce their overall connectivity costs for the receipt of market data. The Exchange is not required by any rule or regulation to make Bats Connect available; nor are subscribers required by any rule or regulation to utilize Bats Connect. Accordingly, subscribers can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. Moreover, the Exchange believes the proposed fees are reasonable and equitable because they continue to be based on the Exchange's costs to cover the amount of bandwidth required to provide connectivity to the select bundle of data feeds. The proposed fees will continue to allow the Exchange to recoup this cost, while providing subscribers with an alternative means to connect to the select bundle of data feeds at a discounted rate. Lastly, the Exchange believes the proposed fees are reasonable and equitable because they are based on the Exchange's costs to cover hardware, installation, testing and connection, as well as expenses involved in maintaining and managing the service. The proposed fees allow the Exchange to recoup these costs, while providing subscribers with an alternative means to connect to other exchange and market centers. The Exchange believes that the proposed fees are reasonable and equitable in that they reflect the costs and the benefit of providing alternative connectivity. (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. As discussed above, the Exchange believes that fees for connectivity are constrained by the robust competition for order flow among exchanges and non-exchange markets. The Exchange does not believe that the proposed changes represent a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Further, excessive fees for connectivity would serve to impair an exchange's ability to compete for order flow rather than burdening competition. Lastly, the Exchange does not believe the proposed fees for Bats Connect will result in any burden on competition. The proposed rule change is designed to provide subscribers with an alternative means to access other market centers on the Exchange's network if they choose or in the event of a market disruption where other alternative connection methods become unavailable. Bats Connect is not the exclusive method to connect to these market centers and subscribers may utilize alternative methods to connect to the product if they believe the Exchange's proposed pricing is unreasonable or otherwise. Therefore, the Exchange does not believe the proposed rule change will have any effect on competition. (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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BatsBZX-2016-90 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-BatsBZX-2016-90. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make [[Page 4441]] available publicly. All submissions should refer to File Number SR- BatsBZX-2016-90 and should be submitted on or before February 3, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-00611 Filed 1-12-17; 8:45 am] BILLING CODE 8011-01-P
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breaching its Net Debit Cap or having B. Consistency With Rule 17Ad– For the Commission, by the Division of
insufficient collateral in the event of a 22(d)(12) Trading and Markets, pursuant to delegated
reversal caused by an RTP. However, authority.22
withholding the credits makes them Rule 17Ad–22(d)(12) under the Act Eduardo A. Aleman,
unavailable to the Participant, which requires DTC to establish, implement, Assistant Secretary.
can cause blockage (i.e., the failure of a maintain and enforce written policies [FR Doc. 2017–00626 Filed 1–12–17; 8:45 am]
transaction to process because of and procedures reasonably designed to BILLING CODE 8011–01–P
insufficient liquidity) for the ensure that final settlement occurs no
Participant. Meanwhile, the RVPNA later than the end of the settlement day;
Control limits a Participant’s ability to and require that intraday or real-time SECURITIES AND EXCHANGE
deliver MMI that the Participant is due finality be provided where necessary to COMMISSION
to receive that day. By preventing reduce risks.18 Through this proposal,
Participants from delivering certain DTC would no longer process MMI [Release No. 34–79762; File No. SR–
transactions automatically but, rather, BatsBZX–2016–90]
MMI securities, the RVPNA Control also
can create blockage. would first require an IPA’s funding Self-Regulatory Organizations; Bats
Because DTC would no longer process acknowledgment and a purchaser’s RAD BZX Exchange, Inc.; Notice of Filing
MMI transactions without a purchaser’s authorization, as applicable. Where and Immediate Effectiveness of a
RAD authorization and an IPA’s MMI such acknowledgements and Proposed Rule Change To Modify Fees
funding acknowledgement, as authorizations are provided, DTC would for Connectivity and Its
applicable, RTPs and resulting intraday no longer permit an RTP, thus Communication and Routing Service
reversals no longer present the risk that eliminating the risk of an intraday Known as Bats Connect
the LPNC and RVPNA Controls are reversal of a processed MMI transaction.
Additionally, the proposal would January 9, 2017.
meant to address. As such, DTC would
eliminate the LPNC and RVPNA Pursuant to Section 19(b)(1) of the
eliminate these controls. This change
Controls, which would help eliminate Securities Exchange Act of 1934
would make available to Participants
blockage caused by the LPNC Control’s (‘‘Act’’),1 and Rule 19b–4 thereunder,2
the intraday credits that were previously
withholding of Participants’ two largest notice is hereby given that on December
withheld by those controls, which
net credits for MMI transactions and the 27, 2016, Bats BZX Exchange, Inc.
would decrease intraday liquidity
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
blockage for the Participant and enable RVPNA Control’s restriction on
Securities and Exchange Commission
DTC to process MMI transactions delivering certain MMI securities. Each
(‘‘Commission’’) the proposed rule
earlier. Thus, Participants would have of these proposed changes, both
change as described in Items I, II, and
less exposure to intraday reversals that individually and collectively, would III below, which Items have been
increase liquidity and settlement risk help ensure that final settlement occurs prepared by the Exchange. The
and a more complete view of their at the end of the day. Therefore, the Exchange has designated the proposed
actual intraday net debit and credit Commission believes that the changes rule change as one establishing or
balances. proposed in the Advance Notice are changing a member due, fee, or other
The Commission also believes that the consistent with Rule 17Ad–22(d)(12) charge imposed by the Exchange under
Proposed Rule Change is consistent under the Act.19 Section 19(b)(3)(A)(ii) of the Act 3 and
with protecting investors and the public III. Conclusion Rule 19b–4(f)(2) thereunder,4 which
interest. As described above, DTC renders the proposed rule change
would no longer automatically process On the basis of the foregoing, the effective upon filing with the
MMI presentments. Rather, DTC would Commission finds that the Proposed Commission. The Commission is
require purchasers to authorize delivery Rule Change is consistent with the publishing this notice to solicit
via RAD and IPAs to provide a funding requirements of the Act and in comments on the proposed rule change
acknowledgment before processing MMI particular with the requirements of from interested persons.
presentments, as applicable. Because Section 17A of the Act 20 and the rules I. Self-Regulatory Organization’s
these changes would eliminate the risk and regulations thereunder. Statement of the Terms of Substance of
of reversals due to an RTP, the changes the Proposed Rule Change
It is therefore ordered, pursuant to
would mitigate the risk of a potential
Section 19(b)(2) of the Act, that The Exchange filed a proposal to
override of DTC’s risk management
proposed rule change SR–DTC–2016– amend the fee schedule applicable to
controls. Thus, the Proposed Rule
008 be, and hereby is, Approved as of Members 5 and non-members of the
Change would help protect investors
the date of this order or the date of a Exchange pursuant to BZX Rules 15.1(a)
and the public interest by reducing
notice by the Commission authorizing and (c) to modify its fees for its equity
DTC’s exposure to potential failures,
DTC to implement DTC’s advance options platform (‘‘BZX Options’’) for
promoting DTC’s safety and soundness,
notice proposal (SR–DTC–2016–802) physical ports and for the use of a
and providing greater assurance that
that is consistent with this Proposed communication and routing service
transactions will settle despite a
Rule Change, whichever is later.21 known as Bats Connect.
Participant default.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Therefore, for the above reasons, the 22 17 CFR 200.30–3(a)(12).
Commission believes that the Proposed 18 17
1 15 U.S.C. 78s(b)(1).
CFR 240.17Ad–22(d)(12).
Rule Change will help promote the 19 Id.
2 17 CFR 240.19b–4.
prompt and accurate clearance and 20 15
3 15 U.S.C. 78s(b)(3)(A)(ii).
U.S.C. 78q–1. 4 17 CFR 240.19b–4(f)(2).
settlement of securities transactions and 21 In approving the proposed rule change, the 5 The term ‘‘Member’’ is defined as ‘‘any
help protect investors and the public Commission considered the proposals’ impact on registered broker or dealer that has been admitted
interest, consistent with Section efficiency, competition, and capital formation. 15 to membership in the Exchange.’’ See Exchange
17A(b)(3)(F) of the Act, cited above. U.S.C. 78c(f). Rule 1.5(n).
VerDate Sep<11>2014 19:06 Jan 12, 2017 Jkt 241001 PO 00000 Frm 00159 Fmt 4703 Sfmt 4703 E:\FR\FM\13JAN1.SGM 13JAN1](https://thefederalregister.org/doc/82_FR_4446/page/1.svg)
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available publicly. All submissions Commission’s Secretary and serving Adviser. The primary responsibility for
should refer to File Number SR– Applicants with a copy of the request, managing the Subadvised Series will
BatsBZX–2016–90 and should be personally or by mail. Hearing requests remain vested in the Adviser. The
submitted on or before February 3, 2017. should be received by the Commission Adviser will evaluate, allocate assets to
For the Commission, by the Division of by 5:30 p.m. on February 3, 2017, and and oversee the Sub-Advisers, and make
Trading and Markets, pursuant to delegated should be accompanied by proof of recommendations about their hiring,
authority.19 service on the Applicants, in the form termination and replacement to the
Eduardo A. Aleman, of an affidavit or, for lawyers, a Board, at all times subject to the
Assistant Secretary. certificate of service. Pursuant to rule 0– authority of the Board.
[FR Doc. 2017–00611 Filed 1–12–17; 8:45 am]
5 under the Act, hearing requests should 2. Applicants request an exemption to
state the nature of the writer’s interest, permit the Adviser, subject to Board
BILLING CODE 8011–01–P
any facts bearing upon the desirability approval, to select certain Sub-
of a hearing on the matter, the reason for Advisers 2 pursuant to sub-advisory
SECURITIES AND EXCHANGE the request, and the issues contested. agreements (each, a ‘‘Sub-Advisory
COMMISSION Persons who wish to be notified of a Agreement’’ and collectively, the Sub-
hearing may request notification by Advisory Agreements’’) and materially
[Investment Company Act Release No. writing to the Commission’s Secretary. amend Sub-Advisory Agreements
32420; 812–14627] without obtaining the shareholder
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street approval required under section 15(a) of
Guardian Variable Products Trust and
NE., Washington, DC 20549–1090. the Act and rule 18f–2 under the Act.
Park Avenue Institutional Advisers
Applicants: Richard T. Potter, The Applicants also seek an exemption from
LLC; Notice of Application
Guardian Life Insurance Company of the Disclosure Requirements to permit a
January 9, 2017. America, Law Department, H–23–G, Subadvised Series to disclose (as both a
AGENCY: Securities and Exchange Suite 300, 7 Hanover Square, New York, dollar amount and a percentage of the
Commission (‘‘Commission’’). New York 10004. Subadvised Series’ net assets): (a) The
ACTION: Notice of an application under aggregate fees paid to the Adviser and
FOR FURTHER INFORMATION CONTACT: Kyle
section 6(c) of the Investment Company any Wholly-Owned Sub-Advisers; (b)
R. Ahlgren, Senior Counsel, at (202)
Act of 1940 (‘‘Act’’) for an exemption the aggregate fees paid to Non-Affiliated
551–6857, or Holly L. Hunter-Ceci,
from section 15(a) of the Act and rule Sub-Advisers; and (c) the fee paid to
Branch Chief, at (202) 551–6821
18f–2 under the Act, as well as from each Affiliated Sub-Adviser
(Division of Investment Management,
certain disclosure requirements in rule (collectively, ‘‘Aggregate Fee
Chief Counsel’s Office).
20a–1 under the Act, Item 19(a)(3) of Disclosure’’).
SUPPLEMENTARY INFORMATION: The 3. Applicants agree that any order
Form N–1A, Items 22(c)(1)(ii), following is a summary of the
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of granting the requested relief will be
application. The complete application subject to the terms and conditions
Schedule 14A under the Securities may be obtained via the Commission’s
Exchange Act of 1934, and Sections 6– stated in the application. Such terms
Web site by searching for the file and conditions provide for, among other
07(2)(a), (b), and (c) of Regulation S–X number, or an applicant using the
(‘‘Disclosure Requirements’’). The safeguards, appropriate disclosure to
Company name box, at http:// Subadvised Series’ shareholders and
requested exemption would permit an www.sec.gov/search/search.htm or by
investment adviser to hire and replace notification about sub-advisory changes
calling (202) 551–8090. and enhanced Board oversight to protect
certain sub-advisers without
shareholder approval and grant relief Summary of the Application the interests of Subadvised Series’
from the Disclosure Requirements as shareholders.
1. The Adviser will serve as the 4. Section 6(c) of the Act provides that
they relate to fees paid to the sub- investment adviser to the Subadvised
advisers. the Commission may exempt any
Series pursuant to an investment person, security, or transaction or any
management agreement with the Trust class or classes of persons, securities, or
APPLICANTS: Guardian Variable
(the ‘‘Investment Management transactions from any provisions of the
Products Trust (the ‘‘Trust’’), a Delaware
Agreement’’).1 The Adviser will provide Act, or any rule thereunder, if such
statutory trust registered under the Act
the Subadvised Series with continuous relief is necessary or appropriate in the
as an open-end management investment
investment management subject to the public interest and consistent with the
company with multiple series (each, a
supervision of the Trust’s board of protection of investors and purposes
‘‘Subadvised Series’’), and Park Avenue
trustees (the ‘‘Board’’). The Investment
Institutional Advisers LLC, a Delaware
Management Agreement permits the 2 The requested relief will extend to certain
limited liability company registered as
Adviser, subject to the approval of the advisers that meet the definition of ‘‘wholly-owned
an investment adviser under the
Board, to delegate to one or more sub- subsidiary’’ in section 2(a)(43) of the Act (‘‘Wholly-
Investment Advisers Act of 1940 (the Owned Sub-Advisers’’) and certain other advisers
advisers (each, a ‘‘Sub-Adviser’’ and
‘‘Adviser,’’ and, together with the Trust, that are not ‘‘affiliated persons’’ (as such term is
collectively, the ‘‘Sub-Advisers’’) the defined in section 2(a)(3) of the Act) of the Series
the ‘‘Applicants’’).
responsibility to provide the day-to-day or the Adviser, except to the extent that an
FILING DATES: The application was filed portfolio investment management of affiliation arises solely because the sub-adviser
March 16, 2016, and amended on
asabaliauskas on DSK3SPTVN1PROD with NOTICES
each Subadvised Series, subject to the serves as sub-adviser to one or more Series (each,
September 8, 2016. supervision and direction of the
a ‘‘Non-Affiliated Sub-Adviser’’ and collectively,
the ‘‘Non-Affiliated Sub-Advisers’’). The requested
HEARING OR NOTIFICATION OF HEARING: relief will not extend to any sub-adviser, other than
An order granting the application will 1 Applicants request relief with respect to the a Wholly-Owned Sub-Adviser, who is an ‘‘affiliated
be issued unless the Commission orders Applicants, any existing or future series of the Trust person’’ (as such term is defined in section 2(a)(3)
a hearing. Interested persons may (the ‘‘Series’’), and any Subadvised Series. For of the 1940 Act) of the Subadvised Series or of the
purposes of the requested order, ‘‘successor’’ is Adviser, other than by reason of serving as a sub-
request a hearing by writing to the limited to an entity that results from a adviser to one or more of the Subadvised Series
reorganization into another jurisdiction or a change (each, an ‘‘Affiliated Sub-Adviser’’ and collectively,
19 17 CFR 200.30–3(a)(12). in the type of business organization. the ‘‘Affiliated Sub-Advisers’’).
VerDate Sep<11>2014 19:06 Jan 12, 2017 Jkt 241001 PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 E:\FR\FM\13JAN1.SGM 13JAN1](https://thefederalregister.org/doc/82_FR_4446/page/5.svg)
Document Created: 2017-01-13 02:44:58
Document Modified: 2017-01-13 02:44:58
| 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 4437 |
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