82 FR 6678 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of the Exchange's Equity Options Platform

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 12 (January 19, 2017)

Page Range		6678-6684
FR Document		2017-01149

Federal Register, Volume 82 Issue 12 (Thursday, January 19, 2017)

[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Notices]
[Pages 6678-6684]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-01149]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79775; File No. SR-BatsBZX-2017-01]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of the Exchange's Equity Options Platform

January 12, 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 January 3, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``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 BZX Rules
15.1(a) and (c).
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\5\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in the Exchange.'' See
Exchange Rule 1.5(n).
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The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
The Exchange proposes to amend its fee schedule for its equity
options platform (``BZX Options'') to: (i) Add definitions of terms
``OCC Customer Volume'' or ``OCV'' and ``Options Step-Up Add TCV'' to
the Definitions section; and (ii) modify the criteria for tiers under
footnotes 1 through 13 to reflect the new definition of OCV. The
Exchange also proposes to (i) increase the rebate provided in the
Customer \6\ Cross-Asset Add Tier under footnote 1; (ii) add a new
Step-Up Tier under footnote 1; (iii) eliminate and replace the existing
Step-Up Tier under footnote 3 with a new Step-Up Tier; (iv) add Tier 3
under footnote 7; (iv) add Tier 2 and a Step-Up Tier under footnote 12;
and (v) add a new footnote 14 entitled,

[[Page 6679]]

``Customer Penny Pilot Take Volume Tier.''
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\6\ As defined in the Exchange's fee schedule available at
http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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New Defined Terms
OCC Customer Volume or OCV. The Exchange proposes to add the
definition of ``OCC Customer Volume'' or ``OCV'' to the definition
section of its fee schedule. OCC Customer Volume or OCV will be defined
as the total equity and Exchange Traded Fund (``ETF'') options volume
that clears in the Customer range at the Options Clearing Corporation
(``OCC'') for the month for which the fees apply, excluding volume on
any day that the Exchange experiences an Exchange System Disruption \7\
and on any day with a scheduled early market close.
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\7\ An ``Exchange System Disruption'' means ``any day that the
Exchange's system experiences a disruption that lasts for more than
60 minutes during Regular Trading Hours.'' Id.
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Options Step-Up Add OCV. The Exchange proposes to replace the
definition of ``Options Step-Up Add TCV'' \8\ with the definition of
``Options Step-Up Add OCV'' to reflect the new tier qualifications
resulting from the change in calculation from Total Consolidated Volume
(``TCV'') \9\ to OCV. Similar to the definition of Options Step-Up Add
TCV, Options Step-Up Add OCV will be defined as, ``ADAV \10\ as a
percentage of OCV in the relevant baseline month subtracted from
current ADAV as a percentage of OCV''. The only difference between the
two definitions is replacing the term TCV with OCV.
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\8\ Id.
\9\ As defined in the Exchange's fee schedule available at
http://www.bats.com/us/options/membership/fee_schedule/bzx/.
\10\ Id.
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Tier Qualifications Change
The Exchange proposes to replace current tier qualifications which
refer to TCV with a reference to OCV in the tiers under footnotes 1
through 13. Because OCV generally makes up a smaller range than the
prior TCV, the Exchange also proposes to amend the percentage of OCV
necessary to achieve the tier so that it is substantially identical to
the previously required percentage of TCV. Doing so will keep each
tier's criteria relatively unchanged from its current requirements. The
rates for each tier are unchanged. Changes to each tier are described
below.
Customer Penny Pilot Add Tiers under footnote 1. Customer orders
that yield fee code PY \11\ are given a standard rebate of $0.25 per
contract. Footnote 1 of the fee schedule sets forth eight tiers, each
providing enhanced rebates, ranging from $0.40 to $0.53 per contract,
to a Member's order that yields fee code PY upon satisfying monthly
volume criteria.
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\11\ Fee code PY is appended to a Member's Customer orders which
add liquidity in Penny Pilot options. Id.
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Tier 1 currently requires that a Member has an ADV \12\
equal to or greater than 0.05% of average TCV. As amended, a Member
must have an ADV equal to or greater than 0.05% of average OCV.\13\
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\12\ Id.
\13\ The Exchange proposes to retain the 0.05% requirement as
adjusting that number to reflect replacing TCV with OCV will result
in a de minimmis change in the percentage.
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Tier 2 currently requires that a Member has an ADV equal
to or greater than 0.30% of average TCV. As amended, a Member must have
an ADV equal to or greater than 0.40% of average OCV.
Tier 3 currently requires that a Member has an ADV equal
to or greater than 1.00% of average TCV. As amended, a Member must have
an ADV equal to or greater than 1.30% of average OCV.
Tier 4 currently requires that a Member has an ADAV in
Customer orders equal to or greater than 1.00% of average TCV. As
amended, a Member must have an ADAV in Customer orders equal to or
greater than 1.30% of average OCV.
Tier 5 currently requires that a Member has an: (i) ADAV
in Customer orders equal to or greater than 0.60% of average TCV; (ii)
ADAV in Market Maker \14\ orders equal to or greater than 0.25% of
average TCV; and (iii) ADAV in orders on the Exchange equities platform
(``BZX Equities'') equal to or greater than 0.30% of average TCV. As
amended, a Member must have an: (i) An ADAV in Customer orders equal to
or greater than 0.80% of average OCV; (ii) an ADAV in Market Maker
orders equal to or greater than 0.35% of average OCV; and (iii) ADAV in
orders on BZX Equities equal to or greater than 0.30% of average TCV.
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\14\ Id.
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Tier 6 currently requires that a Member has an ADAV in
Customer orders equal to or greater than 1.30% of average TCV. As
amended, a Member must have an ADAV in Customer orders equal to or
greater than 1.70% of average OCV.
The Customer Step-Up Volume Tier currently requires that a
Member has an Options Step-Up Add TCV in Customer orders from September
2015 baseline equal to or greater than 0.40%. As amended, a Member must
have an Options Step-Up Add OCV in Customer orders from September 2015
baseline equal to or greater than 0.45%.
The Customer Cross-Asset Add Tier currently requires that
a Member has an: (i) ADV equal to or greater than 0.80% of average TCV;
and (ii) ADAV on BZX Equities equal to or greater than 0.50% of average
TCV. As amended, a Member must have an: (i) ADAV in Customer orders
equal to or greater than 0.50% of average OCV; and (ii) ADAV on BZX
Equities greater than or equal to 0.50% of average TCV. As a result of
the change from requiring a Member to meet a certain threshold of ADV
to a certain threshold of ADAV, the Exchange proposes to increase the
rebate provided by this tier from $0.50 to $0.52 per contract. The
Exchange believes an increased rebate more appropriately corresponds
with the tier's more stringent criteria.
Firm,\15\ Broker Dealer,\16\ and Joint Back Office \17\ Penny Pilot
Add Volume Tiers under footnote 2. Firm, Broker Dealer and Joint Back
Office orders that yield fee code PF \18\ are given a standard rebate
of $0.36 per contract. Footnote 2 of the fee schedule sets forth two
tiers, each providing enhanced rebates of $0.43 and $0.46 per contract
to a Member's order that yields fee codes PF upon satisfying monthly
volume criteria.
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\15\ Id.
\16\ Id.
\17\ Id.
\18\ Fee code PF is appended to a Member's Firm, Broker Deal and
Joint Back Office orders which add liquidity in Penny Pilot options.
As defined in the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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Tier 1 currently requires that a Member has an: (i) ADAV
in Away Market Maker,\19\ Firm, Broker Dealer and Joint Back Office
orders greater than or equal to 0.80% of average TCV; and (ii) ADV
greater than or equal to 1.50% of average TCV. As amended, a Member
must have an: (i) ADAV in Away Market Maker, Firm, Broker Dealer and
Joint Back Office orders greater than or equal to 1.05% of average OCV;
and (ii) ADV greater than or equal to 1.95% of average OCV.
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\19\ Id.
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Tier 2 currently requires that a Member has an: (i) ADV
greater than or equal to 0.40% of average TCV; and (ii) ADAV in Away
Market Maker, Firm, Broker Dealer and Joint Back Office greater than or
equal to 0.30% of average TCV. As amended, a Member must have an: (i)
ADV greater than or equal to 0.50% of average OCV; and (ii) ADAV in
Away Market Maker, Firm, Broker Dealer and Joint Back Office greater
than or equal to 0.40% of average OCV.

[[Page 6680]]

Non-Customer Penny Pilot Take Volume Tiers under footnote 3. Non-
Customer orders that yield fee code PP \20\ are charged a standard fee
of $0.50 per contract. Footnote 3 of the fee schedule sets forth three
tiers, each providing reduced fees ranging from $0.44 to $0.47 per
contract to a Member's order that yields fee codes PP upon satisfying
monthly volume criteria.\21\
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\20\ Fee code PP is appended to a Member's Non-Customer orders
which remove liquidity in Penny Pilot options. Id.
\21\ Footnote 3 also includes an additional Step-Up Tier under
which Members orders that yield fee code PP receive an additional
$0.01 discount upon satisfying certain criteria. As described in
more detail below, the Exchange proposes to delete this tier with a
new Step-Up Tier as part of this filing.
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Tier 1 currently requires that a Member has an: (i) ADAV
in Customer orders greater than or equal to 0.60% of average TCV; (ii)
ADAV in Market Maker orders greater than or equal to 0.25% of average
TCV and (iii) ADAV on BZX Equities greater than or equal to 0.30% of
average TCV. As amended, a Member must have an: (i) ADAV in Customer
orders greater than or equal to 0.80% of average OCV; (ii) ADAV in
Market Maker orders greater than or equal to 0.35% of average OCV; and
(iii) ADAV on BZX Equities greater than or equal to 0.30% of average
TCV.
Tier 2 currently requires that a Member has an ADAV in
Customer orders greater than or equal to 1.00% of average TCV. As
amended, a Member must have an ADAV in Customer orders greater than or
equal to 1.30% of average OCV.
Tier 3 currently requires that a Member has an ADAV in
Customer orders greater than or equal to 1.30% of average TCV. As
amended, a Member must have an ADAV in Customer orders greater than or
equal to 1.70% of average OCV.
National Best Bid or Best Offer (``NBBO'') Setter Tiers under
footnote 4. Footnote 4 of the fee schedule sets forth five tiers, each
providing enhanced rebates, ranging from $0.02 to $0.05 per contract,
to a Member's orders that establish a new NBBO and yield fee codes PF,
PM \22\ or PN \23\ upon satisfying monthly volume criteria.
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\22\ Fee code PM is appended to a Member's Market Maker orders
which add liquidity in Penny Pilot options and provides a standard
rebate of $0.35 per contract. Id.
\23\ Fee code PN is appended to a Member's Away Market Maker
orders which add liquidity in Penny Pilot options and provides a
standard rebate of $0.30 per contract. As defined in the Exchange's
fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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\24\ Id.
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Tier 5 currently requires that a Member has an ADAV in
Non-Customer orders greater than or equal to 2.30% of average TCV. As
amended a Member must have an ADAV in Non-Customer orders greater than
or equal to 3.00% of average OCV.
Quoting Incentive Program (``QIP'') Tiers under footnote 5.
Footnote 5 sets forth four tiers each providing additional rebates
ranging from $0.02 to $0.05 per contract for an order appended with fee
code PM or NM \25\ that adds liquidity to the BZX Options order book in
options classes in which a Member is a Market Maker registered on BZX
Options pursuant to Exchange Rule 22.2. A Market Maker must be
registered with BZX Options in an average of 20% or more of the
associated options series in a class in order to qualify for QIP
rebates for that class.
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\25\ Fee code NM is appended to a Member's Market Maker orders
which add liquidity in Non-Penny Pilot options. As defined in the
Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
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Tier 1 currently requires that a Member has an ADV greater
than or equal to 0.30% of average TCV. As amended, a Member must have
an ADV greater than or equal to 0.40% of average OCV.
Tier 2 currently requires that a Member has an ADV greater
than or equal to 1.00% of average TCV. As amended, a Member must have
an ADV greater than or equal to 1.30% of average OCV.
Tier 3 currently requires that a Member has an ADV greater
than or equal to 2.50% of average TCV. As amended, a Member must have
an ADV greater than or equal to 3.25% of average OCV.
Tier 4 currently requires that a Member has an ADV [sic]
in Market Maker orders greater than or equal to 0.40% of average TCV.
As amended, a Member must have an ADV [sic] in Market Maker orders
greater than or equal to 0.50% of average OCV.
Market Maker Penny Pilot Add Volume Tiers under footnote 6.
Footnote 6 of the fee schedule sets forth two tiers, each providing
enhanced rebates of $0.40 and $0.42 per contract to a Member's order
that yields fee code PM upon satisfying monthly volume criteria.
Tier 1 currently requires that a Member has an ADV greater
than or equal to 0.30% of average TCV. As amended, a Member must have
an ADV greater than or equal to 0.40% of average OCV.
Tier 2 currently requires that a Member has an: (i) ADAV
in Market Maker and/or Away Market Maker orders greater than or equal
to 1.00% of average TCV; and (ii) ADV greater than or equal to 2.00% of
average TCV. As amended, a Member must have an: (i) ADAV in Market
Maker and/or Away Market Maker orders greater than or equal to 1.30% of
average OCV; and (ii) ADV greater than or equal to 2.60% of average
OCV.
Market Maker Non-Penny Pilot Add Volume Tiers under footnote 7.
Footnote 7 of the fee schedule sets forth two tiers, each providing
enhanced rebates of $0.45 and $0.52 per contract to a Member's order
that yields fee code NM upon satisfying monthly volume criteria,\26\
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\26\ As described in more detail below, the Exchange also
proposes to adopt a third tier under footnote 7 as part of this
filing.
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[[Page 6681]]

yield fee code NF \27\ are given a standard rebate of $0.30 per
contract. Footnote 8 of the fee schedule sets forth three tiers, each
providing enhanced rebates ranging from $0.45 to $0.69 per contract to
a Member's order that yields fee codes NF upon satisfying monthly
volume criteria.
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\27\ Fee code NF is appended to a Member's Firm, Broker Dealer
and Joint Back Office orders which add liquidity in Non-Penny Pilot
options. Id.
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Tier 1 currently requires that a Member has an ADV greater
than or equal to 0.15% of average TCV. As amended, a Member must have
an ADV greater than or equal to 0.20% of average OCV.
Tier 2 currently requires that a Member has an ADV greater
than or equal to 0.25% of average TCV. As amended, a Member must have
an ADV greater than or equal to 0.35% of average OCV.
Tier 3 currently requires that a Member has an: (i) ADV
greater than or equal to 1.75% of average TCV; and (ii) ADAV in Away
Market Maker, Firm, Broker Dealer, and Joint Back Office orders greater
than or equal to 1.25% of average TCV. As amended, a Member must have
an: (i) ADV greater than or equal to 2.30% of average OCV; and (ii)
ADAV in Away Market Maker, Firm, Broker Dealer, and Joint Back Office
orders greater than or equal to 1.65% of average OCV.
Professional Penny Pilot Add Volume Tiers under footnote 9.
Professional orders that yield fee code PA \28\ are given a standard
rebate of $0.25 per contract. Footnote 9 of the fee schedule sets forth
four tiers, each providing enhanced rebates ranging from $0.42 to $0.48
per contract to a Member's order that yields fee codes PA upon
satisfying monthly volume criteria.
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\28\ Fee code PA is appended to a Member's Professional orders
which add liquidity in Penny Pilot options. Id.
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Tier 1 currently requires that a Member has an ADAV in
Customer and Professional orders greater than or equal to 0.10% of
average TCV. As amended, a Member must have an ADAV in Customer and
Professional orders greater than or equal to 0.15% of average OCV.
Tier 2 currently requires that a Member has an ADAV in
Customer and Professional orders greater than or equal to 0.20% of
average TCV. As amended, a Member must have an ADAV in Customer and
Professional orders greater than or equal to 0.25% of average OCV.
Tier 3 currently requires that a Member has an ADAV in
Customer and Professional orders greater than or equal to 0.30% of
average TCV. As amended, a Member must have an ADAV in Customer and
Professional orders greater than or equal to 0.40% of average OCV.
Tier 4 currently requires that a Member has an ADAV in
Customer and Professional orders greater than or equal to 0.50% of
average TCV. As amended a Member must have an ADAV in Customer and
Professional orders greater than or equal to 0.65% of average OCV.
Away Market Maker Penny Pilot Add Volume Tiers under footnote 10.
Away Market Maker orders that yield fee code PN are given a standard
rebate of $0.30 per contract. Footnote 10 of the fee schedule sets
forth three tiers, each providing enhanced rebates ranging from $0.40
to $0.46 per contract to a Member's order that yields fee code PN upon
satisfying monthly volume criteria.
Tier 1 currently requires that a Member has an ADV greater
than or equal to 0.30% of average TCV. As amended, a Member must have
an ADV greater than or equal to 0.40% of average OCV.
Tier 2 currently requires that a Member has an: (i) ADAV
in Away Market Maker, Firm, Broker Dealer and Joint Back Office orders
greater than or equal to 0.80% of average TCV; and (ii) ADV greater
than or equal to 1.50% of average TCV. As amended, a Member must have
an: (i) ADAV in Away Market Maker, Firm, Broker Dealer and Joint Back
Office orders greater than or equal to 1.05% of average OCV; and (ii)
ADV greater than or equal to 1.95% of average OCV.
Tier 3 currently requires that a Member has an: (i) ADV
greater than or equal to 0.40% of average TCV: and (ii) ADAV in Away
Market Maker, Firm, Broker Dealer and Joint Back Office orders greater
than or equal to 0.30% of average TCV. As amended, a Member must have
an: (i) ADV greater than or equal to 0.50% of average OCV; and (ii)
ADAV in Away Market Maker, Firm, Broker Dealer and Joint Back Office
orders greater than or equal to 0.40% of average OCV.
Away Market Maker Non-Penny Pilot Add Volume Tiers under footnote
11. Away Market Maker orders that yield fee code NN \29\ are given a
standard rebate of $0.30 per contract. Footnote 11 of the fee schedule
sets forth two tiers, each providing enhanced rebates of $0.40 and
$0.52 per contract to a Member's order that yields fee code NN upon
satisfying monthly volume criteria.
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\29\ Fee code NN is appended to a Member's Away Market Maker
orders which add liquidity in Non-Penny Pilot options. Id.
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\30\ Fee code NY is appended to a Member's Customer orders which
add liquidity in Non-Penny Pilot options. As defined in the
Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/.
\31\ As described in more detail below, the Exchange proposes to
implement a second and third tier under footnote 12 as part of this
filing.
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Tier 1 currently requires that a Member has an ADAV in
Customer orders greater than or equal to 0.70% of average TCV. As
amended a Member must have an ADAV in Customer orders greater than or
equal to 0.90% of average OCV.
Non-Customer Non-Penny Pilot Take Volume Tiers, under footnote 13.
Non-Customer orders that yield fee code NP \32\ are charged a standard
fee of $1.07 per contract. Footnote 13 of the fee schedule sets forth
three tiers, each providing reduced fees ranging from $1.01 to $1.02
per contract to a Member's order that yields fee code NP upon
satisfying monthly volume criteria.
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\32\ Fee code NP is appended to a Member's Non-Customer orders
which remove liquidity in Non-Penny Pilot options. Id.
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[[Page 6682]]

orders greater than or equal to 1.00% of average TCV. As amended a
Member must have an ADAV in Customer orders greater than or equal to
1.30% of average OCV.
Tier 3 currently requires that a Member has an ADAV in
Customer orders greater than or equal to 1.30% of average TCV. As
amended, a Member must have an ADAV in Customer orders greater than or
equal to 1.70% of average OCV.
Addition of the Step-Up Tier, Under Footnote 1
As described above, the Exchange currently offers eight Customer
Penny Pilot Add Volume Tiers under footnote 1 which provide enhanced
rebates ranging from $0.40 to $0.53 per contract for orders which yield
fee code PY and meet the required criteria. The Exchange now proposes
to add a Step-Up Tier which would provide an additional rebate of $0.02
to orders appended with fee code PY, including those orders that
satisfy the required criteria under the tiers listed under footnote 1.
To qualify for the additional rebate, a Member must have an Options
Step-Up Add OCV in Customer orders from October 2016 baseline equal to
or greater than 0.45%.
Elimination and Replacement of the Step-Up Tier Under Footnote 3
As described above, the Exchange currently offers three Non-
Customer Penny Pilot Take Volume Tiers under footnote 3 which provide
reduced fees of $0.44 and $0.47 per contract for orders which yield fee
code PP and meet the required criteria. Additionally, footnote 3
provides a Step-Up Tier under which Members may receive an additional
discount of $0.01 per contract for orders appended with fee code PP,
including those orders that satisfy the required criteria under the
tiers listed under footnote 3. To receive the additional $0.01 per
contract discount, the Member must have an Options Step-Up Add TCV in
Customer orders from September 2016 baseline greater than or equal to
0.30%. The Exchange now proposes to delete and replace this Step-Up
Tier under footnote 3 with a new Step-Up Tier which would provide a
reduced fee of $0.47 per contract for orders which yield fee code PP
and where the Member has an Options Step-Up Add OCV in Customer orders
from October 2016 baseline greater than or equal to 0.45%.
Addition of Tier 3 Under Footnote 7
As described above, the Exchange currently offers two Market Maker
Non-Penny Pilot Add Volume Tiers under footnote 7 which provide
enhanced rebates of $0.45 and $0.52 per contract for orders which yield
fee code NM and meet the required criteria. The Exchange now proposes
to add Tier 3 under which a Member would receive an enhanced rebate of
$0.65 per contract where that Member has an: (i) ADAV in Market Maker
orders in Non-Penny Pilot Securities greater than or equal to 0.20% of
average OCV; and (ii) ADAV in Non-Customer orders greater than or equal
to 3.00% of average OCV. The Exchange also notes that changes are
required to the Standard Rates table of the fee schedule applicable to
fee code NM in connection with this change.
Addition of Tier 2 and the Customer Step-Up Tier Under Footnote 12
As described above, the Exchange currently offers one Customer Non-
Penny Pilot Add Volume Tier under footnote 12 which provides an
enhanced rebate of $1.00 per contract for orders which yield fee code
NY and meet the required criteria. The Exchange now proposes to add two
new tiers under footnote 12. First, proposed Tier 2 would provide an
enhanced rebate of $1.05 per contract where that Member has an ADAV in
Customer orders greater than or equal to 2.10% of average OCV. Second,
the proposed Step-Up Tier will provide an enhanced rebate of $1.00 per
contract where that Member has an Options Step-Up Add OCV in Customer
orders from October 2016 baseline greater than or equal to 0.45%. The
Exchange also notes that changes are required to the Standard Rates
table of the fee schedule applicable to fee code NY in connection with
these changes.
Addition of Footnote 14, the Customer Penny Pilot Take Volume Tier
The Exchange proposes to add new footnote 14 entitled, ``Customer
Penny Pilot Take Volume Tier''. Under the proposed Cross-Asset Tier, a
Member's orders that yield fee code PC \33\ would be charged a reduced
fee of $0.48 per contract where that Member has an: (i) ADAV in
Customer orders greater than or equal to 0.50% of average OCV; and (ii)
ADAV on BZX Equities greater than or equal to 0.50% of average TCV. The
Exchange also notes that changes are required to the Standard Rates
table of the fee schedule applicable to fee code PC in connection with
this change. In addition, the Exchange proposes to append footnote 14
to fee code PC within in the Fee Codes and Associated Fees table.
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\33\ Fee code PC is appended to a Member's Customer orders which
remove liquidity in Penny Pilot options and is charged a standard
fee of $0.49 per contract. Id.
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Implementation Date
The Exchange proposes to implement this amendment to its fee
schedule on January 3, 2017.\34\
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\34\ The Exchange notes that the date of the fee schedule was
updated to January 3, 2017 in SR-BatsBZX-2016-90 (filed on December
27, 2016).
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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,\35\ in general, and
furthers the objectives of Section 6(b)(4),\36\ 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 Exchange believes that the proposed fee
changes are equitable and non-discriminatory in that they apply
uniformly to all Members. The Exchange believes the rates remain
competitive with those charged by other venues and, therefore, are
reasonable and equitably allocated to Members.
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\35\ 15 U.S.C. 78f.
\36\ 15 U.S.C. 78f(b)(4).
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New Defined Terms
The Exchange believes adopting a definition of OCV, utilizing OCV
in lieu of TCV, and changing the definition of Options Step-Up Add TCV
to Options Step-Up Add OCV are reasonable, fair and equitable, and non-
discriminatory because the Exchange also proposed to modify the tier's
related criteria in order to maintain substantially identical
requirements to qualify for the tier without changing the rate provided
for by the tiers. In addition, the amount of OCV historically tends to
remain reasonably consistent from month to month, as opposed to TCV
which is less consistent. OCV is also more consistent than options
volume that clears in the Market Maker or Firm range at the OCC, as
Market Maker and Firm volume may vary drastically from month to month
based on market events, as opposed to Customer options volume which
remains relatively consistent. Therefore, the Exchange believes
utilizing OCV would result in consistent tier criteria as OCV is a
relatively static monthly number which would enable market participants
to better predict whether they may achieve a tier criteria each month
and qualify for that tier's preferred pricing.

[[Page 6683]]

The Exchange also believes that the use of OCV provides a
calculation that is identical to that which was implemented in December
2016 on the EDGX Options fee schedule.\37\ Additionally, the OCV
calculation is reasonably identical to and is not a significant
departure from tier qualifications conventions offered by other
exchanges.\38\ The Exchange believes that the proposed definition of
OCV and the proposed revision of the definition of Options Step-Up Add
TCV to Options Step-Up Add OCV are reasonable, fair and equitable, and
non-discriminatory, and will provide additional transparency and
simplicity to Members regarding the calculations used to determine
volume levels for purposes of the proposed tiered pricing model.
---------------------------------------------------------------------------

\37\ See Securities Exchange Act Release No. 239239 [sic]
(December 7, 2016), 81 FR 90009 (December 13, 2016) (SR-BatsEDGX-
2016-68).
\38\ See the NYSE MKT LLC (``NYSE MKT'') fee schedule available
at https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf (setting forth tiers that provide
preferred pricing to options market makers who meet certain
criteria, including achieving a specific ``Monthly Volume as a % of
Industry Customer Equity and Exchange Traded Fund (``ETF'') Option
Volume''); NYSE Arca, Inc. (``NYSE ARCA'') options fee schedule
available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (setting forth a Market
Maker Incentive tier that provides preferred pricing to market
makers who meet certain criteria, including achieving a specific
percentage of ``Total Industry Customer equity and ETF option
ADV''); Nasdaq Stock Market LLC (``Nasdaq'') options fee schedule
available at http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing (setting forth tiers that provide
preferred pricing to market makers who meet certain criteria,
including achieving a specific percentage of ``total industry
customer equity and ETF option ADV contracts per month''); and
Nasdaq BX LLC (``BX'') options fee schedule available at http://www.nasdaqtrader.com/Micro.aspx?id=BXOptionsPricing (setting forth
tiers that provide preferred pricing to market makers who meet
certain criteria, including achieving a specific percentage of
``total industry customer equity and ETF option ADV contracts per
month'').
---------------------------------------------------------------------------

Volume-Based Tier Modifications
The Exchange believes that the proposed modifications to the tiered
pricing structure are reasonable, fair and equitable, and non-
discriminatory. The Exchange operates in a highly competitive market in
which market participants may readily send order flow to many competing
venues if they deem fees at the Exchange to be excessive. The proposed
fee structure remains intended to attract order flow to the Exchange by
offering market participants a competitive pricing structure. The
Exchange believes it is reasonable to offer and incrementally modify
incentives intended to help to contribute to the growth of the
Exchange.
Volume-based rebates such as that proposed herein have been widely
adopted by exchanges, including the Exchange, and are equitable because
they are open to all Members on an equal basis and provide additional
benefits or discounts that are reasonably related to: (i) The value to
an exchange's market quality; (ii) associated higher levels of market
activity, such as higher levels of liquidity provisions and/or growth
patterns; and (iii) introduction of higher volumes of orders into the
price and volume discovery processes.
The proposed modifications and additions proposed herein are also
intended to incentivize additional Members to send orders to the
Exchange in an effort to qualify for the enhanced rebate made available
by the tiers. The Exchange believes the proposed change to each tier's
criteria is consistent with the Act.
Proposed Revisions and New Tiers under Footnotes 1, 3, 7, and 12.
The Exchange believes the proposed tiers under footnotes 1, 3 7, and 12
are reasonable, fair and equitable, and non-discriminatory. The
proposed tiers are intended to attract order flow to the Exchange by
offering market participants a competitive pricing structure. The
Exchange believes it is reasonable to offer incrementally modified
incentives intended to help to contribute to the growth of the
Exchange. First, the Exchange believes the revisions to the Customer
Cross-Asset Add Tier under footnote 1 are equitable and reasonable
because further incentivize Members to reach certain thresholds on both
BZX Options and BZX Equities. Such pricing programs thereby reward a
Member's growth pattern on the Exchange and such increased volume
increases potential revenue to the Exchange, and will allow the
Exchange to continue to provide and potentially expand the incentive
programs operated by the Exchange. To the extent a Member participates
on the BZX Options but not on BZX Equities, the Exchange does believe
that the proposal is still reasonable, equitably allocated and non-
discriminatory with respect to such Member based on the overall benefit
to the Exchange resulting from the success of BZX Equities.
Additionally, the Exchange believes the elimination and replacement
of the Step-Up tier under footnote 3 is reasonable, fair, and equitable
because the current tier was not providing the desired result of
incentivizing Members to increase their participation over time.
Therefore, eliminating the current Step-Up Tier under footnote 3 will
have a negligible effect on order flow and market behavior. The
Exchange believes the proposed new Step-Up Tier under footnote 3 should
incentives Members to increase their participation in Customer and Non-
Customer orders. Likewise, the proposed tiers under footnotes 1, 7 and
12 are also designed to incentivize Members to increase their
participation on the Exchange. The Exchange believes it is reasonable
to continue to modify the volume based incentives to help to contribute
to the growth of the Exchange. The Exchange also believes the proposed
change is not unfairly discriminatory because it will apply equally to
all participants.
Addition of Footnote 14, Customer Penny Pilot Take Volume Tier. The
Exchange believes that the proposal to add a Cross-Asset Tier is a
reasonable, fair and equitable, and not unfairly discriminatory
allocation of fees and rebates for similar reasons stated above with
regard to the revisions of the Customer Cross-Asset Add Tier under
footnote 1. Specifically, the Exchange believes the proposed tier will
provide Members with an additional incentive to reach certain
thresholds on both BZX Equities and BZX Options. The increased
liquidity from this proposal also benefits all investors by deepening
the BZX Equities and BZX Options liquidity pools, offering additional
flexibility for all investors to enjoy cost savings, supporting the
quality of price discovery, promoting market transparency and improving
investor protection. Such pricing programs thereby reward a Member's
growth pattern on the Exchange and such increased volume increases
potential revenue to the Exchange, and will allow the Exchange to
continue to provide and potentially expand the incentive programs
operated by the Exchange. To the extent a Member participates on the
Exchange but not on BZX Equities, the Exchange does believe that the
proposal is still reasonable, equitably allocated and non-
discriminatory with respect to such Member based on the overall benefit
to the Exchange resulting from the success of BZX Options. As noted
above, such success allows the Exchange to continue to provide and
potentially expand its existing incentive programs to the benefit of
all participants on the Exchange, whether they participate on BZX
Options or not. The proposed pricing program is also fair and equitable
in that membership in BZX Options is available to all market
participants which would provide them with access to the benefits on
BZX Options provided by the proposed changes, as described above, even
where a member of BZX Options is not

[[Page 6684]]

necessarily eligible for the proposed increased rebates on the
Exchange. Further, the proposed changes will result in Members
receiving either the same or an increased rebate than they would
currently receive. The Exchange also believes that the proposed tiered
pricing structure is consistent with pricing previously offered by the
Exchange as well as other options exchanges and does not represent a
significant departure from such pricing structures.\39\
---------------------------------------------------------------------------

\39\ See, e.g., BZX Exchange Options Fee Schedule, Footnote 1,
Customer Add Tier, which provides an enhanced rebate to Customer
orders on BZX Options based on both Customer volume and Market Maker
volume. The BZX Options Fee Schedule is available at: http://www.batsoptions.com/support/fee_schedule/bzx/.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe its proposed amendment to its fee
schedule would impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The Exchange
does not believe that the proposed changes represents a significant
departure from previous pricing offered by the Exchange or pricing
offered by the Exchange's competitors. The Exchange believes that its
proposal to amend the qualification criteria and to incorporate OCV as
proposed would not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because the Exchange also proposed to modify the tier's related
criteria in order to maintain substantially identical requirements to
qualify for each tier. Additionally, Members may opt to disfavor the
Exchange's pricing if they believe that alternatives offer them better
value. Accordingly, the Exchange does not believe that the proposed
changes to the volume discount and rebate structure will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets. The Exchange believes that its
proposal would not burden intramarket competition because the proposed
rate changes would continue to apply uniformly to all Members. As
stated above, the Exchange notes that it operates in a highly
competitive market in which market participants can readily direct
order flow to competing venues if they deem fee structure s to be
unreasonable or excessive. The Exchange does not believe the proposed
tiers would burden intramarket competition as they would apply to all
Members uniformly.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others

The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any 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 \40\ and paragraph (f) of Rule 19b-4
thereunder.\41\ 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.
---------------------------------------------------------------------------

\40\ 15 U.S.C. 78s(b)(3)(A).
\41\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please
include File Number SR-BatsBZX-2017-01 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBZX-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-BatsBZX-2017-01 and should
be submitted on or before February 9, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

\42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01149 Filed 1-18-17; 8:45 am]
BILLING CODE 8011-01-P

6678 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Notices

III. Date of Effectiveness of the public in accordance with the publishing this notice to solicit
Proposed Plan and Timing for provisions of 5 U.S.C. 552, will be comments on the proposed rule change
Commission Action available for Web site viewing and from interested persons.
Pursuant to Section 17(d)(1) of the printing in the Commission’s Public
I. Self-Regulatory Organization’s
Act 11 and Rule 17d–2 thereunder,12 Reference Room, 100 F Street NE.,
Washington, DC 20549, on official Statement of the Terms of Substance of
February 3, 2017 declare the plan the Proposed Rule Change
submitted by MIAX, MIAX PEARL, and business days between the hours of
FINRA, File No. 4–678, to be effective 10:00 a.m. and 3:00 p.m. Copies of the The Exchange filed a proposal to
if the Commission finds that the plan is plan also will be available for inspection amend the fee schedule applicable to
necessary or appropriate in the public and copying at the principal offices of Members 5 and non-members of the
interest and for the protection of MIAX, MIAX PEARL, and FINRA. All Exchange pursuant to BZX Rules 15.1(a)
investors, to foster cooperation and comments received will be posted and (c).
coordination among self-regulatory without change; the Commission does
The text of the proposed rule change
organizations, or to remove not edit personal identifying
is available at the Exchange’s Web site
impediments to and foster the information from submissions. You
at www.batstrading.com, at the
development of the national market should submit only information that
principal office of the Exchange, and at
system and a national system for the you wish to make available publicly. All
the Commission’s Public Reference
clearance and settlement of securities submissions should refer to File
Room.
transactions and in conformity with the Number 4–678 and should be submitted
factors set forth in Section 17(d) of the on or before February 3, 2017. II. Self-Regulatory Organization’s
Act. For the Commission, by the Division of Statement of the Purpose of, and
Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments authority.13 Change
In order to assist the Commission in
determining whether to approve the Eduardo A. Aleman, In its filing with the Commission, the
proposed 17d–2 Plan and to relieve Assistant Secretary.
Exchange included statements
MIAX and MIAX PEARL of the concerning the purpose of and basis for
[FR Doc. 2017–01151 Filed 1–18–17; 8:45 am]
responsibilities which would be the proposed rule change and discussed
BILLING CODE 8011–01–P
assigned to FINRA, interested persons any comments it received on the
are invited to submit written data, proposed rule change. The text of these
views, and arguments concerning the SECURITIES AND EXCHANGE statements may be examined at the
foregoing. Comments may be submitted COMMISSION places specified in Item IV below. The
by any of the following methods: Exchange has prepared summaries, set
[Release No. 34–79775; File No. SR– forth in Sections A, B, and C below, of
Electronic Comments BatsBZX–2017–01] the most significant parts of such
• Use the Commission’s Internet Self-Regulatory Organizations; Bats
statements.
comment form (http://www.sec.gov/ BZX Exchange, Inc.; Notice of Filing A. Self-Regulatory Organization’s
rules/other.shtml); or and Immediate Effectiveness of a Statement of the Purpose of, and
• Send an email to rule-comments@
Proposed Rule Change Related to Fees Statutory Basis for, the Proposed Rule
sec.gov. Please include File Number4–
for Use of the Exchange’s Equity Change
678 on the subject line.
Options Platform
1. Purpose
Paper Comments
January 12, 2017.
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
The Exchange proposes to amend its
to Brent J. Fields, Secretary, Securities fee schedule for its equity options
Securities Exchange Act of 1934 (the
and Exchange Commission, Station platform (‘‘BZX Options’’) to: (i) Add
‘‘Act’’),1 and Rule 19b–4 thereunder,2
Place, 100 F Street NE., Washington, DC definitions of terms ‘‘OCC Customer
notice is hereby given that on January 3,
20549–1090. Volume’’ or ‘‘OCV’’ and ‘‘Options Step-
2017, Bats BZX Exchange, Inc. (the
All submissions should refer to File Up Add TCV’’ to the Definitions section;
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Number 4–678. This file number should and (ii) modify the criteria for tiers
Securities and Exchange Commission
be included on the subject line if email under footnotes 1 through 13 to reflect
(the ‘‘Commission’’) the proposed rule
is used. To help the Commission the new definition of OCV. The
change as described in Items I, II, and
process and review your comments Exchange also proposes to (i) increase
III below, which Items have been
more efficiently, please use only one the rebate provided in the Customer 6
prepared by the Exchange. The
method. The Commission will post all Exchange has designated the proposed Cross-Asset Add Tier under footnote 1;
comments on the Commission’s Internet rule change as one establishing or (ii) add a new Step-Up Tier under
Web site (http://www.sec.gov/rules/ changing a member due, fee, or other footnote 1; (iii) eliminate and replace
other.shtml). Copies of the submission, charge imposed by the Exchange under the existing Step-Up Tier under footnote
all subsequent amendments, all written Section 19(b)(3)(A)(ii) of the Act 3 and 3 with a new Step-Up Tier; (iv) add Tier
statements with respect to the proposed 3 under footnote 7; (iv) add Tier 2 and
Rule 19b–4(f)(2) thereunder,4 which
rule change that are filed with the a Step-Up Tier under footnote 12; and
renders the proposed rule change
(v) add a new footnote 14 entitled,
mstockstill on DSK3G9T082PROD with NOTICES

Commission, and all written effective upon filing with the
communications relating to the Commission. The Commission is
proposed rule change between the 5 The term ‘‘Member’’ is defined as ‘‘any

Commission and any person, other than 13 17
registered broker or dealer that has been admitted
CFR 200.30–3(a)(34). to membership in the Exchange.’’ See Exchange
those that may be withheld from the 1 15 U.S.C. 78s(b)(1).
Rule 1.5(n).
2 17 CFR 240.19b–4. 6 As defined in the Exchange’s fee schedule
11 15 U.S.C. 78q(d)(1). 3 15 U.S.C. 78s(b)(3)(A)(ii).
available at http://www.bats.com/us/options/
12 17 CFR 240.17d–2. 4 17 CFR 240.19b–4(f)(2). membership/fee_schedule/bzx/.

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6680 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Notices

Non-Customer Penny Pilot Take amended, a Member must have an ADV greater than or equal to 1.30% of
Volume Tiers under footnote 3. Non- greater than or equal to 0.40% of average OCV.
Customer orders that yield fee code average OCV. • Tier 3 currently requires that a
PP 20 are charged a standard fee of $0.50 • Tier 2 currently requires that a Member has an ADV greater than or
per contract. Footnote 3 of the fee Member has an ADV greater than or equal to 2.50% of average TCV. As
schedule sets forth three tiers, each equal to 1.00% of average TCV. As amended, a Member must have an ADV
providing reduced fees ranging from amended, a Member must have an ADV greater than or equal to 3.25% of
$0.44 to $0.47 per contract to a greater than or equal to 1.30% of average OCV.
Member’s order that yields fee codes PP average OCV. • Tier 4 currently requires that a
upon satisfying monthly volume • Tier 3 currently requires that a Member has an ADV [sic] in Market
criteria.21 Member has an: (i) ADV greater than or Maker orders greater than or equal to
• Tier 1 currently requires that a equal to 0.40% of average TCV; and (ii) 0.40% of average TCV. As amended, a
Member has an: (i) ADAV in Customer ADAV in Away Market Maker, Firm, Member must have an ADV [sic] in
orders greater than or equal to 0.60% of Broker Dealer and Joint Back Office Market Maker orders greater than or
average TCV; (ii) ADAV in Market orders greater than or equal to 0.30% of equal to 0.50% of average OCV.
Maker orders greater than or equal to average TCV. As amended, a Member Market Maker Penny Pilot Add
0.25% of average TCV and (iii) ADAV must have an: (i) ADV greater than or Volume Tiers under footnote 6. Footnote
on BZX Equities greater than or equal to equal to 0.50% of average OCV; and (ii) 6 of the fee schedule sets forth two tiers,
0.30% of average TCV. As amended, a ADAV in Away Market Maker, Firm, each providing enhanced rebates of
Member must have an: (i) ADAV in Broker Dealer and Joint Back Office $0.40 and $0.42 per contract to a
Customer orders greater than or equal to orders greater than or equal to 0.40% of Member’s order that yields fee code PM
0.80% of average OCV; (ii) ADAV in average OCV. upon satisfying monthly volume
Market Maker orders greater than or • Tier 4 currently requires that a criteria.
equal to 0.35% of average OCV; and (iii) Member has an ADAV in Market • Tier 1 currently requires that a
ADAV on BZX Equities greater than or Maker 24 orders greater than or equal to Member has an ADV greater than or
equal to 0.30% of average TCV. 0.40% of average TCV. As amended a equal to 0.30% of average TCV. As
• Tier 2 currently requires that a Member must have an ADAV in Market amended, a Member must have an ADV
Member has an ADAV in Customer Maker orders greater than or equal to greater than or equal to 0.40% of
orders greater than or equal to 1.00% of 0.50% of average OCV. average OCV.
average TCV. As amended, a Member • Tier 5 currently requires that a • Tier 2 currently requires that a
must have an ADAV in Customer orders Member has an ADAV in Non-Customer Member has an: (i) ADAV in Market
greater than or equal to 1.30% of orders greater than or equal to 2.30% of Maker and/or Away Market Maker
average OCV. average TCV. As amended a Member orders greater than or equal to 1.00% of
• Tier 3 currently requires that a must have an ADAV in Non-Customer average TCV; and (ii) ADV greater than
Member has an ADAV in Customer orders greater than or equal to 3.00% of or equal to 2.00% of average TCV. As
orders greater than or equal to 1.30% of average OCV. amended, a Member must have an: (i)
average TCV. As amended, a Member Quoting Incentive Program (‘‘QIP’’) ADAV in Market Maker and/or Away
must have an ADAV in Customer orders Tiers under footnote 5. Footnote 5 sets Market Maker orders greater than or
greater than or equal to 1.70% of forth four tiers each providing equal to 1.30% of average OCV; and (ii)
average OCV. additional rebates ranging from $0.02 to ADV greater than or equal to 2.60% of
National Best Bid or Best Offer $0.05 per contract for an order average OCV.
(‘‘NBBO’’) Setter Tiers under footnote 4. appended with fee code PM or NM 25 Market Maker Non-Penny Pilot Add
Footnote 4 of the fee schedule sets forth that adds liquidity to the BZX Options Volume Tiers under footnote 7. Footnote
five tiers, each providing enhanced order book in options classes in which 7 of the fee schedule sets forth two tiers,
rebates, ranging from $0.02 to $0.05 per a Member is a Market Maker registered each providing enhanced rebates of
contract, to a Member’s orders that on BZX Options pursuant to Exchange $0.45 and $0.52 per contract to a
establish a new NBBO and yield fee Rule 22.2. A Market Maker must be Member’s order that yields fee code NM
codes PF, PM 22 or PN 23 upon satisfying registered with BZX Options in an upon satisfying monthly volume
monthly volume criteria. average of 20% or more of the criteria,26
• Tier 1 currently requires that a associated options series in a class in • Tier 1 currently requires that a
Member has an ADV greater than or order to qualify for QIP rebates for that Member has an ADV greater than or
equal to 0.30% of average TCV. As class. equal to 0.30% of average TCV. As
• Tier 1 currently requires that a amended, a Member must have an ADV
20 Fee code PP is appended to a Member’s Non-
Member has an ADV greater than or greater than or equal to 0.40% of
Customer orders which remove liquidity in Penny
Pilot options. Id. equal to 0.30% of average TCV. As average OCV.
21 Footnote 3 also includes an additional Step-Up amended, a Member must have an ADV • Tier 2 currently requires that a
Tier under which Members orders that yield fee greater than or equal to 0.40% of Member has an ADV greater than or
code PP receive an additional $0.01 discount upon
average OCV. equal to 1.00% of average TCV. As
satisfying certain criteria. As described in more amended, a Member must have an ADV
detail below, the Exchange proposes to delete this • Tier 2 currently requires that a
tier with a new Step-Up Tier as part of this filing. Member has an ADV greater than or greater than or equal to 1.30% of
22 Fee code PM is appended to a Member’s Market
equal to 1.00% of average TCV. As average OCV.
mstockstill on DSK3G9T082PROD with NOTICES

Maker orders which add liquidity in Penny Pilot amended, a Member must have an ADV Firm, Broker Dealer, and Joint Back
options and provides a standard rebate of $0.35 per Office Non-Penny Pilot Add Volume
contract. Id.
23 Fee code PN is appended to a Member’s Away 24 Id.
Tiers under footnote 8. Firm, Broker
Market Maker orders which add liquidity in Penny 25 Fee code NM is appended to a Member’s Dealer and Joint Back Office orders that
Pilot options and provides a standard rebate of Market Maker orders which add liquidity in Non-
$0.30 per contract. As defined in the Exchange’s fee Penny Pilot options. As defined in the Exchange’s 26 As described in more detail below, the

schedule available at http://www.bats.com/us/ fee schedule available at http://www.bats.com/us/ Exchange also proposes to adopt a third tier under
options/membership/fee_schedule/bzx/. options/membership/fee_schedule/bzx/. footnote 7 as part of this filing.

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Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Notices 6681

yield fee code NF 27 are given a standard a Member must have an ADAV in upon satisfying monthly volume
rebate of $0.30 per contract. Footnote 8 Customer and Professional orders criteria.
of the fee schedule sets forth three tiers, greater than or equal to 0.40% of • Tier 1 currently requires that a
each providing enhanced rebates average OCV. Member has an ADV greater than or
ranging from $0.45 to $0.69 per contract • Tier 4 currently requires that a equal to 0.30% of average TCV. As
to a Member’s order that yields fee Member has an ADAV in Customer and amended, a Member must have an ADV
codes NF upon satisfying monthly Professional orders greater than or equal greater than or equal to 0.40% of
volume criteria. to 0.50% of average TCV. As amended average OCV.
• Tier 1 currently requires that a a Member must have an ADAV in • Tier 2 currently requires that a
Member has an ADV greater than or Customer and Professional orders Member has an ADV greater than or
equal to 0.15% of average TCV. As greater than or equal to 0.65% of equal to 1.00% of average TCV. As
amended, a Member must have an ADV average OCV. amended, a Member must have an ADV
greater than or equal to 0.20% of Away Market Maker Penny Pilot Add greater than or equal to 1.30% of
average OCV. Volume Tiers under footnote 10. Away average OCV.
• Tier 2 currently requires that a Customer Non-Penny Pilot Add
Market Maker orders that yield fee code
Member has an ADV greater than or Volume Tier under footnote 12.
PN are given a standard rebate of $0.30
equal to 0.25% of average TCV. As Customer orders that yield fee code
per contract. Footnote 10 of the fee NY 30 are given a standard rebate of
amended, a Member must have an ADV
schedule sets forth three tiers, each $0.85 per contract. Footnote 12 of the
greater than or equal to 0.35% of
providing enhanced rebates ranging fee schedule sets forth one tier,
average OCV.
• Tier 3 currently requires that a from $0.40 to $0.46 per contract to a providing an enhanced rebate of $1.00
Member has an: (i) ADV greater than or Member’s order that yields fee code PN per contract to a Member’s order that
equal to 1.75% of average TCV; and (ii) upon satisfying monthly volume yields fee code NY upon satisfying
ADAV in Away Market Maker, Firm, criteria. monthly volume criteria.31
Broker Dealer, and Joint Back Office • Tier 1 currently requires that a • Tier 1 currently requires that a
orders greater than or equal to 1.25% of Member has an ADV greater than or Member has an ADAV in Customer
average TCV. As amended, a Member equal to 0.30% of average TCV. As orders greater than or equal to 0.70% of
must have an: (i) ADV greater than or amended, a Member must have an ADV average TCV. As amended a Member
equal to 2.30% of average OCV; and (ii) greater than or equal to 0.40% of must have an ADAV in Customer orders
ADAV in Away Market Maker, Firm, average OCV. greater than or equal to 0.90% of
Broker Dealer, and Joint Back Office • Tier 2 currently requires that a average OCV.
orders greater than or equal to 1.65% of Member has an: (i) ADAV in Away Non-Customer Non-Penny Pilot Take
average OCV. Market Maker, Firm, Broker Dealer and Volume Tiers, under footnote 13. Non-
Professional Penny Pilot Add Volume Joint Back Office orders greater than or Customer orders that yield fee code
Tiers under footnote 9. Professional equal to 0.80% of average TCV; and (ii) NP 32 are charged a standard fee of $1.07
orders that yield fee code PA 28 are ADV greater than or equal to 1.50% of per contract. Footnote 13 of the fee
given a standard rebate of $0.25 per average TCV. As amended, a Member schedule sets forth three tiers, each
contract. Footnote 9 of the fee schedule must have an: (i) ADAV in Away Market providing reduced fees ranging from
sets forth four tiers, each providing Maker, Firm, Broker Dealer and Joint $1.01 to $1.02 per contract to a
enhanced rebates ranging from $0.42 to Back Office orders greater than or equal Member’s order that yields fee code NP
$0.48 per contract to a Member’s order to 1.05% of average OCV; and (ii) ADV upon satisfying monthly volume
that yields fee codes PA upon satisfying greater than or equal to 1.95% of criteria.
monthly volume criteria. average OCV. • Tier 1 currently requires that a
• Tier 1 currently requires that a • Tier 3 currently requires that a Member has an: (i) ADAV in Customer
Member has an ADAV in Customer and Member has an: (i) ADV greater than or orders greater than or equal to 0.60% of
Professional orders greater than or equal equal to 0.40% of average TCV: and (ii) average TCV; (ii) ADAV in Market
to 0.10% of average TCV. As amended, ADAV in Away Market Maker, Firm, Maker orders greater than or equal to
a Member must have an ADAV in Broker Dealer and Joint Back Office 0.25% of average TCV; and (iii) ADAV
Customer and Professional orders orders greater than or equal to 0.30% of on BZX Equities greater than or equal to
greater than or equal to 0.15% of average TCV. As amended, a Member 0.30% of average TCV. As amended, a
average OCV. must have an: (i) ADV greater than or Member must have an: (i) ADAV in
• Tier 2 currently requires that a equal to 0.50% of average OCV; and (ii) Customer orders greater than or equal to
Member has an ADAV in Customer and ADAV in Away Market Maker, Firm, 0.80% of average OCV; (ii) ADAV in
Professional orders greater than or equal Broker Dealer and Joint Back Office Market Maker orders greater than or
to 0.20% of average TCV. As amended, orders greater than or equal to 0.40% of equal to 0.35% of average OCV; and (iii)
a Member must have an ADAV in average OCV. ADAV on BZX Equities greater than or
Customer and Professional orders Away Market Maker Non-Penny Pilot equal to 0.30% of average TCV.
greater than or equal to 0.25% of Add Volume Tiers under footnote 11. • Tier 2 currently requires that a
average OCV. Away Market Maker orders that yield Member has an ADAV in Customer
• Tier 3 currently requires that a fee code NN 29 are given a standard 30 Fee code NY is appended to a Member’s
Member has an ADAV in Customer and rebate of $0.30 per contract. Footnote 11 Customer orders which add liquidity in Non-Penny
Professional orders greater than or equal
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of the fee schedule sets forth two tiers, Pilot options. As defined in the Exchange’s fee
to 0.30% of average TCV. As amended, each providing enhanced rebates of schedule available at http://www.bats.com/us/
$0.40 and $0.52 per contract to a options/membership/fee_schedule/bzx/.
27 Fee code NF is appended to a Member’s Firm, 31 As described in more detail below, the

Broker Dealer and Joint Back Office orders which
Member’s order that yields fee code NN Exchange proposes to implement a second and
add liquidity in Non-Penny Pilot options. Id. third tier under footnote 12 as part of this filing.
28 Fee code PA is appended to a Member’s 29 Fee code NN is appended to a Member’s Away 32 Fee code NP is appended to a Member’s Non-

Professional orders which add liquidity in Penny Market Maker orders which add liquidity in Non- Customer orders which remove liquidity in Non-
Pilot options. Id. Penny Pilot options. Id. Penny Pilot options. Id.

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6682 Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Notices

orders greater than or equal to 1.00% of footnote 7 which provide enhanced within in the Fee Codes and Associated
average TCV. As amended a Member rebates of $0.45 and $0.52 per contract Fees table.
must have an ADAV in Customer orders for orders which yield fee code NM and
Implementation Date
greater than or equal to 1.30% of meet the required criteria. The Exchange
average OCV. now proposes to add Tier 3 under The Exchange proposes to implement
• Tier 3 currently requires that a which a Member would receive an this amendment to its fee schedule on
Member has an ADAV in Customer enhanced rebate of $0.65 per contract January 3, 2017.34
orders greater than or equal to 1.30% of where that Member has an: (i) ADAV in 2. Statutory Basis
average TCV. As amended, a Member Market Maker orders in Non-Penny Pilot
must have an ADAV in Customer orders The Exchange believes that the
Securities greater than or equal to 0.20%
greater than or equal to 1.70% of proposed rule change is consistent with
of average OCV; and (ii) ADAV in Non-
average OCV. the objectives of Section 6 of the Act,35
Customer orders greater than or equal to in general, and furthers the objectives of
Addition of the Step-Up Tier, Under 3.00% of average OCV. The Exchange Section 6(b)(4),36 in particular, as it is
Footnote 1 also notes that changes are required to designed to provide for the equitable
the Standard Rates table of the fee allocation of reasonable dues, fees and
As described above, the Exchange
schedule applicable to fee code NM in other charges among its Members and
currently offers eight Customer Penny
connection with this change. other persons using its facilities. The
Pilot Add Volume Tiers under footnote
1 which provide enhanced rebates Addition of Tier 2 and the Customer Exchange also notes that it operates in
ranging from $0.40 to $0.53 per contract Step-Up Tier Under Footnote 12 a highly-competitive market in which
for orders which yield fee code PY and market participants can readily direct
meet the required criteria. The Exchange As described above, the Exchange order flow to competing venues if they
now proposes to add a Step-Up Tier currently offers one Customer Non- deem fee levels at a particular venue to
which would provide an additional Penny Pilot Add Volume Tier under be excessive. The Exchange believes
rebate of $0.02 to orders appended with footnote 12 which provides an that the proposed fee changes are
fee code PY, including those orders that enhanced rebate of $1.00 per contract equitable and non-discriminatory in that
satisfy the required criteria under the for orders which yield fee code NY and they apply uniformly to all Members.
tiers listed under footnote 1. To qualify meet the required criteria. The Exchange The Exchange believes the rates remain
for the additional rebate, a Member now proposes to add two new tiers competitive with those charged by other
must have an Options Step-Up Add under footnote 12. First, proposed Tier venues and, therefore, are reasonable
OCV in Customer orders from October 2 would provide an enhanced rebate of and equitably allocated to Members.
2016 baseline equal to or greater than $1.05 per contract where that Member New Defined Terms
0.45%. has an ADAV in Customer orders greater
than or equal to 2.10% of average OCV. The Exchange believes adopting a
Elimination and Replacement of the Second, the proposed Step-Up Tier will definition of OCV, utilizing OCV in lieu
Step-Up Tier Under Footnote 3 provide an enhanced rebate of $1.00 per of TCV, and changing the definition of
As described above, the Exchange contract where that Member has an Options Step-Up Add TCV to Options
currently offers three Non-Customer Options Step-Up Add OCV in Customer Step-Up Add OCV are reasonable, fair
Penny Pilot Take Volume Tiers under orders from October 2016 baseline and equitable, and non-discriminatory
footnote 3 which provide reduced fees greater than or equal to 0.45%. The because the Exchange also proposed to
of $0.44 and $0.47 per contract for Exchange also notes that changes are modify the tier’s related criteria in order
orders which yield fee code PP and required to the Standard Rates table of to maintain substantially identical
meet the required criteria. Additionally, the fee schedule applicable to fee code requirements to qualify for the tier
footnote 3 provides a Step-Up Tier NY in connection with these changes. without changing the rate provided for
under which Members may receive an by the tiers. In addition, the amount of
additional discount of $0.01 per Addition of Footnote 14, the Customer OCV historically tends to remain
contract for orders appended with fee Penny Pilot Take Volume Tier reasonably consistent from month to
code PP, including those orders that month, as opposed to TCV which is less
The Exchange proposes to add new consistent. OCV is also more consistent
satisfy the required criteria under the footnote 14 entitled, ‘‘Customer Penny
tiers listed under footnote 3. To receive than options volume that clears in the
Pilot Take Volume Tier’’. Under the Market Maker or Firm range at the OCC,
the additional $0.01 per contract proposed Cross-Asset Tier, a Member’s
discount, the Member must have an as Market Maker and Firm volume may
orders that yield fee code PC 33 would vary drastically from month to month
Options Step-Up Add TCV in Customer be charged a reduced fee of $0.48 per
orders from September 2016 baseline based on market events, as opposed to
contract where that Member has an: (i) Customer options volume which
greater than or equal to 0.30%. The ADAV in Customer orders greater than remains relatively consistent. Therefore,
Exchange now proposes to delete and or equal to 0.50% of average OCV; and the Exchange believes utilizing OCV
replace this Step-Up Tier under footnote (ii) ADAV on BZX Equities greater than would result in consistent tier criteria as
3 with a new Step-Up Tier which would or equal to 0.50% of average TCV. The OCV is a relatively static monthly
provide a reduced fee of $0.47 per Exchange also notes that changes are number which would enable market
contract for orders which yield fee code required to the Standard Rates table of participants to better predict whether
PP and where the Member has an the fee schedule applicable to fee code they may achieve a tier criteria each
mstockstill on DSK3G9T082PROD with NOTICES

Options Step-Up Add OCV in Customer PC in connection with this change. In month and qualify for that tier’s
orders from October 2016 baseline addition, the Exchange proposes to preferred pricing.
greater than or equal to 0.45%. append footnote 14 to fee code PC
Addition of Tier 3 Under Footnote 7 34 The Exchange notes that the date of the fee

33 Fee code PC is appended to a Member’s schedule was updated to January 3, 2017 in SR–
As described above, the Exchange Customer orders which remove liquidity in Penny BatsBZX–2016–90 (filed on December 27, 2016).
currently offers two Market Maker Non- Pilot options and is charged a standard fee of $0.49 35 15 U.S.C. 78f.

Penny Pilot Add Volume Tiers under per contract. Id. 36 15 U.S.C. 78f(b)(4).

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Document Created: 2018-02-01 15:15:47
Document Modified: 2018-02-01 15:15:47

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 6678