[Federal Register Volume 73, Number 246 (Monday, December 22, 2008)]
[Notices]
[Pages 78409-78411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30318]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59095; File No. SR-BATS-2008-012]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Related to 
Fees for Use of the Exchange

December 12, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 9, 2008, BATS Exchange, Inc. (``BATS'' or the ``Exchange'') 
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. BATS 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 proposes to modify its fee schedule applicable to use 
of the Exchange effective December 12, 2008 in order to (i) implement 
new pricing for orders routed away from the Exchange that are executed 
at dark liquidity venues as part of the Exchange's routing strategies, 
and (ii) substitute the current fee schedule with a fee schedule in a 
revised format.
    The text of the proposed rule change is available at the Exchange's 
Web site at http://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

[[Page 78410]]

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 fee schedule in order to 
implement new pricing for orders routed away from the Exchange that are 
executed at dark liquidity venues as part of the Exchange's routing 
strategies. In addition, the Exchange proposes to reformat the fee 
schedule to better reflect the routing charges applicable to Members.
(a) Orders Routed to and Executed at Dark Liquidity Venues
    The Exchange recently amended its Rule 11.13 to provide additional 
flexibility to the Exchange's affiliated routing broker-dealer, BATS 
Trading, Inc. (the ``Outbound Router'') in making routing 
determinations.\5\ This rule change was primarily made to permit the 
Outbound Router to send orders to Trading Centers (as defined in 
Exchange Rule 2.11),\6\ without limiting the permissible destinations 
to execution venues with ``protected quotations'' (as defined in Rule 
600(b)(58) of the Act).\7\ Such Trading Centers may include execution 
venues known as dark liquidity venues, which do not publish quotations. 
Because dark liquidity venues provide the possibility of executions at 
reduced rates, the Exchange is proposing to charge Members $0.0020 per 
share executed at such a dark liquidity venue. The Exchange will 
continue to charge $0.0029 per share executed at any other Trading 
Center. The proposed fee schedule also notes, consistent with the 
Exchange's technical specifications, that the default best execution 
routing strategy first attempts to route to dark liquidity venues 
(``DART'' routing) and then to other Trading Centers (``CYCLE'' 
routing).
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    \5\ See Securities Exchange Act Release No. 34-58776 (October 
14, 2008), 73 FR 63529 (October 24, 2008) (SR-BATS-2008-007).
    \6\ The Exchange's definition of Trading Center, contained in 
Rule 2.11, is consistent with the definition of ``trading center'' 
contained in Rule 600(b)(78) of Regulation NMS.
    \7\ 17 CFR 242.600(b)(58).
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(b) Non-Substantive, Structural Changes
    In addition to the proposed change above related to orders routed 
to and executed at dark liquidity venues, the Exchange is proposing to 
make certain non-substantive, structural changes to its fee schedule. 
First, the Exchange is proposing to restructure its fee schedule to 
distinguish between its standard routing charges (i.e., those charges 
for orders routed away by the Outbound Router under its best execution 
strategies) and non-standard routing charges imposed for specific order 
types and securities (e.g., Destination Specific Orders, odd lot orders 
and securities priced below $1.00 per share). In addition, the Exchange 
proposes to consolidate into one list certain Destination Specific 
Orders \8\ which were previously listed separately, as such order types 
are each charged the same fee.\9\ The Exchange believes that the 
revised format of the fee schedule is more transparent and easy to 
understand with respect to fees charged for routed orders.
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    \8\ As defined in BATS Rule 11.9(c)(10).
    \9\ The Exchange charges $0.0029 per share for Destination 
Specific Orders routed to the NASDAQ Stock Market, the International 
Securities Exchange, and the National Securities Exchange.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\10\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\11\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and other persons using any facility or system which the 
Exchange operates or controls. 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 levels at a 
particular venue to be excessive. The Exchange believes that its fees 
and credits are competitive with those charged by other venues, and 
that reduced transaction fees for shares executed at dark liquidity 
venues will benefit market participants. Also, although routing options 
are available to all Members, Members are not required to use the 
Exchange's Outbound Router for routing to other Trading Centers. The 
Exchange also believes that the reformatted fee schedule sets forth the 
fees applicable to routed orders in a more transparent manner. Finally, 
the Exchange believes that the proposed rates are equitable in that 
they apply uniformly to all Members.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition.

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

    No written comments were solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 
19b-4(f)(2) thereunder,\13\ because it establishes or changes a due, 
fee or other charge imposed on members by the Exchange. Accordingly, 
the proposal is effective upon filing with the Commission.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.

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 e-mail to [email protected]. Please include 
File Number SR-BATS-2008-012 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-BATS-2008-012. This file

[[Page 78411]]

number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room, on official business 
days between the hours of 10 a.m. and 3 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 
makeavailable publicly. All submissions should refer to File Number SR-
BATS-2008-012 and should be submitted on or before January 12, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Florence E. Harmon,
Acting Secretary.
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    \14\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-30318 Filed 12-19-08; 8:45 am]
BILLING CODE 8011-01-P