82 FR 5619 - Self-Regulatory Organizations; Bats EDGA 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 11 (January 18, 2017)

Page Range		5619-5622
FR Document		2017-00964

Federal Register, Volume 82 Issue 11 (Wednesday, January 18, 2017)

[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Notices]
[Pages 5619-5622]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-00964]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79773; File No. SR-BatsEDGA-2017-01]

Self-Regulatory Organizations; Bats EDGA 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 11, 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 January 5, 2017, Bats EDGA Exchange, Inc. (``Exchange'' or ``EDGA'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Exchange has designated
the proposed rule change as one establishing or changing a member due,
fee, or other charge imposed by the Exchange under Section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders the proposed rule change effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ and non-members of the Exchange pursuant to EDGA Rules
15.1(a) and (c) to modify its fees for physical ports, logical ports,
and for the use of a communication and routing service known as Bats
Connect.
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\5\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in the Exchange.'' See
Exchange Rule 1.5(n).
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The text of the proposed rule change is available at the Exchange's
Web site at www.bats.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to modify its fees for physical ports,
logical 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 to 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.
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\6\ The term ``System'' is defined as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.'' See Exchange Rule
1.5(cc).
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Logical Ports
The Exchange currently charges for logical ports (including
Multicast PITCH Spin Server and GRP ports) $500 per port per month. A
logical port

[[Page 5620]]

represents a port established by the Exchange within the Exchange's
system for trading and billing purposes. Each logical port established
is specific to a Member or non-Member and grants that Member or non-
Member the ability to operate a specific application, such as FIX order
entry or PITCH data receipt. Logical port fees are limited to logical
ports in the Exchange's primary data center and no logical port fees
are assessed for redundant secondary data center ports. The Exchange
assesses the monthly per logical port fees to all Members' and non-
Members' logical ports. The Exchange now proposes to increase charges
for logical ports (including Multicast PITCH Spin Server and GRP ports)
from $500 per port per month to $550 per month. Like as for the
proposed fee increase for physical ports described above, the proposed
increase in logical port fees is intended to cover increased
infrastructure costs associated with establishing ports to connect to
the Exchange's Systems and to enable the Exchange to continue to
maintain and improve its market technology and services.
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.
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\7\ See Exchange Rule 13.9.
\8\ The Exchange's affiliated exchanges are Bats EDGX Exchange,
Inc. (``EDGX''), Bats BYX Exchange, Inc. (``BYX''), and Bats BZX
Exchange, Inc. (``BZX'').
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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:
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\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
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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/TDDS.\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

[[Page 5621]]

products would be charged under the proposed rule change.
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\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.
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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, to be known as the OPRA + SIP
Bundle. 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.\11\
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\11\ The Exchange initially filed the proposed rule change on
December 27, 2016. (SR-BatsEDGA-2016-33). On January 5, 2017, the
Exchange withdrew SR-BatsEDGA-2016-33 and submitted this filing.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\12\ in general, and
furthers the objectives of Section 6(b)(4),\13\ 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.
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(4).
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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.\14\ 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.
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\14\ See 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).
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Logical Ports
The Exchange believes that the increase of fees for logical ports
represents an equitable allocation of reasonable dues, fees and other
charges. The Exchange believes that its proposed changes to logical
port fees are reasonable in light of the benefits to Exchange
participants of direct market access and receipt of data. The Exchange
believes its proposed fees are reasonable because Nasdaq and NYSE Arca
charge comparable rates for logical ports to access such markets.\15\
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\15\ See Nasdaq Rule 7015(b) (charging a fee of $575 per month
for FIX Trading Ports) 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) (charging a
fee of $550 per month for ports for order/quote entry).
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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.\16\
In addition, the proposed rates continue to be less than what a
subscriber would pay to connect directly to another exchange.\17\ The
Exchange notes that, overall, the connectivity fee for routing of
orders to other market centers proposed by the Exchange is similar to
that charged by the NYSE.
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\16\ See Section 3.6.1 of NYSE's SFTI Americas Product and
Service List available at http://www.nyxdata.com/docs/connectivity.
\17\ See e.g., 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).
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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.

[[Page 5622]]

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.\18\
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\18\ See Nasdaq Rule 7034 (setting forth Nasdaq's connectivity
fees for receipt of third party market data products).
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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 \19\ and paragraph (f) of Rule 19b-4
thereunder.\20\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BatsEDGA-2017-01 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-BatsEDGA-2017-01. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsEDGA-2017-01 and should
be submitted on or before February 8, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-00964 Filed 1-17-17; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 11 / Wednesday, January 18, 2017 / Notices 5619

Electronic Comments SECURITIES AND EXCHANGE concerning the purpose of and basis for
COMMISSION the proposed rule change and discussed
• Use the Commission’s Internet any comments it received on the
comment form (http://www.sec.gov/ [Release No. 34–79773; File No. SR–
BatsEDGA–2017–01]
proposed rule change. The text of these
rules/sro.shtml); or statements may be examined at the
• Send an email to rule-comments@ Self-Regulatory Organizations; Bats places specified in Item IV below. The
sec.gov. Please include File Number SR– EDGA Exchange, Inc.; Notice of Filing Exchange has prepared summaries, set
BatsEDGX–2017–02 on the subject line. and Immediate Effectiveness of a forth in Sections A, B, and C below, of
Proposed Rule Change To Modify Fees the most significant parts of such
Paper Comments for Connectivity and Its statements.
• Send paper comments in triplicate Communication and Routing Service (A) Self-Regulatory Organization’s
to Secretary, Securities and Exchange Known as Bats Connect Statement of the Purpose of, and
Commission, 100 F Street NE., January 11, 2017. Statutory Basis for, the Proposed Rule
Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the Change
All submissions should refer to File Securities Exchange Act of 1934 1. Purpose
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange proposes to modify its
Number SR–BatsEDGX–2017–02. This
notice is hereby given that on January 5, fees for physical ports, logical ports, and
file number should be included on the
2017, Bats EDGA Exchange, Inc. for the use of a communication and
subject line if email is used. To help the
(‘‘Exchange’’ or ‘‘EDGA’’) filed with the routing service known as Bats Connect.
Commission process and review your Securities and Exchange Commission
comments more efficiently, please use Each of these proposed changes are
(‘‘Commission’’) the proposed rule described below.
only one method. The Commission will change as described in Items I, II, and
post all comments on the Commission’s III below, which Items have been Physical Ports
Internet Web site (http://www.sec.gov/ prepared by the Exchange. The A physical port is utilized by a
rules/sro.shtml). Copies of the Exchange has designated the proposed Member or non-Member to connect to
submission, all subsequent rule change as one establishing or the Exchange at the data centers where
amendments, all written statements changing a member due, fee, or other the Exchange’s servers are located. The
with respect to the proposed rule charge imposed by the Exchange under Exchange currently maintains a
change that are filed with the Section 19(b)(3)(A)(ii) of the Act 3 and presence in two third-party data centers:
Commission, and all written Rule 19b–4(f)(2) thereunder,4 which (i) the primary data center where the
communications relating to the renders the proposed rule change Exchange’s business is primarily
proposed rule change between the effective upon filing with the conducted on a daily basis, and (ii) a
Commission and any person, other than Commission. The Commission is secondary data center, which is
those that may be withheld from the publishing this notice to solicit predominantly maintained for business
public in accordance with the comments on the proposed rule change continuity purposes. The Exchange
provisions of 5 U.S.C. 552, will be from interested persons. currently assesses the following
available for Web site viewing and I. Self-Regulatory Organization’s physical connectivity fees for Members
printing in the Commission’s Public Statement of the Terms of Substance of and non-Members on a monthly basis:
Reference Room, 100 F Street NE., the Proposed Rule Change $2,000 per physical port that connects
Washington, DC 20549, on official to the System 6 via 1 gigabyte circuit;
The Exchange filed a proposal to and $4,000 per physical port that
business days between the hours of amend the fee schedule applicable to connects to the System via 10 gigabyte
10:00 a.m. and 3:00 p.m. Copies of the Members 5 and non-members of the circuit. The Exchange proposes to
filing also will be available for Exchange pursuant to EDGA Rules increase the fee per physical port that
inspection and copying at the principal 15.1(a) and (c) to modify its fees for connects to the System via a 10 gigabyte
office of the Exchange. All comments physical ports, logical ports, and for the circuit from $4,000 per month to $6,000
received will be posted without change; use of a communication and routing per month in order to cover its
the Commission does not edit personal service known as Bats Connect. increased infrastructure costs associated
identifying information from The text of the proposed rule change with establishing physical ports to
submissions. You should submit only is available at the Exchange’s Web site connect to the Exchange’s Systems and
information that you wish to make at www.bats.com, at the principal office enable it to continue to maintain and
available publicly. All submissions of the Exchange, and at the improve its market technology and
should refer to File Number SR– Commission’s Public Reference Room. services. The Exchange does not
BatsEDGX–2017–02 and should be II. Self-Regulatory Organization’s propose to amend the fee for a 1
submitted on or before February 8, 2017. Statement of the Purpose of, and gigabyte circuit, which will remain
For the Commission, by the Division of Statutory Basis for, the Proposed Rule $2,000 per month.
Trading and Markets, pursuant to delegated Change Logical Ports
authority.21 In its filing with the Commission, the The Exchange currently charges for
Eduardo A. Aleman, Exchange included statements logical ports (including Multicast PITCH
mstockstill on DSK3G9T082PROD with NOTICES

Assistant Secretary. Spin Server and GRP ports) $500 per
1 15 U.S.C. 78s(b)(1).
[FR Doc. 2017–00965 Filed 1–17–17; 8:45 am] port per month. A logical port
2 17 CFR 240.19b–4.
BILLING CODE 8011–01–P 3 15 U.S.C. 78s(b)(3)(A)(ii).
6 The term ‘‘System’’ is defined as ‘‘the electronic
4 17 CFR 240.19b–4(f)(2).
communications and trading facility designated by
5 The term ‘‘Member’’ is defined as ‘‘any
the Board through which securities orders of Users
registered broker or dealer that has been admitted are consolidated for ranking, execution and, when
to membership in the Exchange.’’ See Exchange applicable, routing away.’’ See Exchange Rule
21 17 CFR 200.30–3(a)(12). Rule 1.5(n). 1.5(cc).

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Federal Register / Vol. 82, No. 11 / Wednesday, January 18, 2017 / Notices 5621

products would be charged under the range of alternative strategies, including Exchange participants of direct market
proposed rule change. routing to the applicable exchange access and receipt of data. The
Lastly, the Exchange proposes to through another participant or market Exchange believes its proposed fees are
charge a discounted fee of $6,390 per center or taking that exchange’s data reasonable because Nasdaq and NYSE
month for subscribers who purchase indirectly. Accordingly, if the Exchange Arca charge comparable rates for logical
connectivity to the OPRA, UQDF/ charges excessive fees, it would stand to ports to access such markets.15
UTDF/OMDF, and CQS/CTS data feeds, lose not only connectivity revenues but
to be known as the OPRA + SIP Bundle. Bats Connect
also revenues associated with the
Absent the discount, a subscriber execution of orders routed to it, and, to The Exchange also believes that its
purchasing connectivity through Bats the extent applicable, market data proposed fees for Bats Connect provide
Connect for each of these market data revenues. The Exchange believes that for the equitable allocation of reasonable
products would pay a total monthly fee this competitive dynamic imposes dues, fees and other charges among
of $7,100. Instead, a subscriber who powerful restraints on the ability of any members and other persons using its
purchases connectivity to each of the exchange to charge unreasonable fees facilities. First, the Exchange charges a
above market data products is charged for connectivity. connectivity fee to subscribers utilizing
a monthly fee of $6,390, which Furthermore, the proposed rule Bats Connect to route orders to other
represents a 10% discount. change is also an equitable allocation of exchanges and market centers that are
reasonable dues, fees, and other charges connected to the Exchange’s network,
Implementation Date which varies based solely on the
as the Exchange believes that the
The Exchange proposes to implement increased fees obtained will enable it to amount of bandwidth selected by the
this amendment to its fee schedule on cover its increased infrastructure costs subscriber. The proposed increased
January 3, 2017.11 associated with establishing physical connectivity fees remain reasonable and
2. Statutory Basis ports to connect to the Exchange’s competitive as compared to similar fees
Systems. The additional revenue from charged by other exchanges. For
The Exchange believes that the the increased fees will also enable the purposes of order routing, the Exchange
proposed rule change is consistent with Exchange to continue to maintain and proposes to now charge $500 for 1 Mb,
the objectives of Section 6 of the Act,12 improve its market technology and $1,000 for 5 Mb, and $1,250 for 10 Mb.
in general, and furthers the objectives of services. The New York Stock Exchange, Inc.
Section 6(b)(4),13 in particular, as it is (‘‘NYSE’’) currently charges $300 for 1
designed to provide for the equitable Physical Ports Mb, $700 for 5 Mb, and $900 for 10
allocation of reasonable dues, fees and The Exchange believes that the Mb.16 In addition, the proposed rates
other charges among its Members and proposed fees for a 10 gigabyte circuit continue to be less than what a
other persons using its facilities. The of $6,000 per month is reasonable in subscriber would pay to connect
Exchange also notes that it operates in that they are less than analogous fees directly to another exchange.17 The
a highly-competitive market in which charged by the Nasdaq Stock Market Exchange notes that, overall, the
market participants can readily direct LLC (‘‘Nasdaq’’) and NYSE Arca, Inc. connectivity fee for routing of orders to
order flow to competing venues if they (‘‘Arca’’), which range from $10,000— other market centers proposed by the
deem fee levels at a particular venue to $15,000 per month for 10 gigabyte Exchange is similar to that charged by
be excessive. The proposed rule change circuits.14 The Exchange believes that the NYSE.
reflects a competitive pricing structure the proposed rates are equitable and Second, with regard to utilizing Bats
designed to incent market participants non-discriminatory in that they apply Connect to receive market data products
to direct their order flow to the uniformly to all Members and non- from other exchanges, the Exchange
Exchange. The Exchange believes that Members. Members and non-Members only charges subscribers a connectivity
the proposed rates are equitable and will continue to choose whether they fee, the amount of which is based solely
non-discriminatory in that they apply want more than one physical port and on the amount of bandwidth required to
uniformly to all Members. The choose the method of connectivity transmit that specific data product to
Exchange believes the fees and credits based on their specific needs. All the subscribers. The Exchange believes
remain competitive with those charged Exchange Members that voluntarily it is necessary to increase the rates for
by other venues and therefore continue select various service options will be select market data feeds as described
to be reasonable and equitably allocated charged the same amount for the same herein to address changes in bandwidth
to Members. services. As is true of all physical necessary to receive such feeds. The
The Exchange believes that the connectivity, all Members and non- increased fees will also enable the
proposal represents an equitable Members have the option to select any Exchange to continue to cover the
allocation of reasonable dues, fees, and connectivity option, and there is no increased infrastructure costs while also
other charges as its fees for physical differentiation with regard to the fees enabling it to continue to maintain and
connectivity are reasonably constrained charged for the service. improve the service.
by competitive alternatives. If a Logical Ports 15 See Nasdaq Rule 7015(b) (charging a fee of $575
particular exchange charges excessive
The Exchange believes that the per month for FIX Trading Ports) and the NYSE
fees for connectivity, affected Members Arca fee schedule available at https://
and non-Members may opt to terminate increase of fees for logical ports www.nyse.com/publicdocs/nyse/markets/nyse-arca/
their connectivity arrangements with represents an equitable allocation of NYSE_Arca_Marketplace_Fees.pdf (dated December
that exchange, and adopt a possible reasonable dues, fees and other charges. 2, 2016) (charging a fee of $550 per month for ports
mstockstill on DSK3G9T082PROD with NOTICES

The Exchange believes that its proposed for order/quote entry).
16 See Section 3.6.1 of NYSE’s SFTI Americas
11 The Exchange initially filed the proposed rule changes to logical port fees are Product and Service List available at http://
change on December 27, 2016. (SR–BatsEDGA– reasonable in light of the benefits to www.nyxdata.com/docs/connectivity.
2016–33). On January 5, 2017, the Exchange 17 See e.g., Nasdaq Rule 7034(b) and the Co-
withdrew SR–BatsEDGA–2016–33 and submitted 14 See Nasdaq Rule 7034(b) and the NYSE Arca Location section of the NYSE Arca fee schedule
this filing. fee schedule available at https://www.nyse.com/ available at https://www.nyse.com/publicdocs/
12 15 U.S.C. 78f.
publicdocs/nyse/markets/nyse-arca/NYSE_Arca_ nyse/markets/nyse-arca/NYSE_Arca_Marketplace_
13 15 U.S.C. 78f(b)(4). Marketplace_Fees.pdf (dated December 2, 2016). Fees.pdf (dated December 2, 2016).

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Document Created: 2018-02-01 15:19:48
Document Modified: 2018-02-01 15:19:48

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 5619