[Federal Register Volume 74, Number 110 (Wednesday, June 10, 2009)]
[Notices]
[Pages 27581-27583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13553]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60041; File No. SR-BATS-2009-017]


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

June 3, 2009.
    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 May 28, 2009, 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 BATS. 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

[[Page 27582]]

change, as amended, 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. While changes to the fee schedule pursuant to this 
proposal will be effective upon filing, the changes will become 
operative on June 1, 2009.
    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 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 applicable to use 
of the Exchange effective June 1, 2009, in order to (i) implement 
pricing for its recently introduced BATS Optional Liquidity Technology 
(``BOLT'') program; and (ii) increase the fee charged by the Exchange 
for Destination Specific Orders for Tape A and C securities routed to 
NYSE Arca from $0.0027 per share to $0.0030 per share. Each of these 
proposals is discussed in further detail below.
(i) BOLT Pricing
    On May 22, 2009, the Exchange adopted changes to BATS Rules 11.9 
and 11.13 pursuant to an immediately effective rule filing that will 
permit the Exchange to offer both a ``BATS Only BOLT Order'' and a pre-
routing processing method (``BOLT Routing'') that will each include an 
optional display period through which a marketable order will be 
displayed to Exchange Users (and market data recipients) for a brief 
period of time designated by the Exchange (the ``variable BOLT display 
period'') for potential execution.\5\ As explained in more detail 
below, with the exception of orders subject to BOLT Routing that are 
executed on the Exchange during the variable BOLT display period, BATS 
Only BOLT Orders and orders subject to BOLT Routing will be charged 
fees and will receive rebates consistent with all other orders executed 
on the Exchange or routed from the Exchange to away trading centers.
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    \5\ See SR-BATS-2009-014 (May 22, 2009), available at http://www.batstrading.com/regulation/rule_filings/.
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    BATS Only BOLT Orders in securities priced at any limit price will 
be treated in the same manner as other such orders submitted to the 
Exchange. Thus, to the extent a BATS Only BOLT Order removes liquidity 
from the BATS Book in securities priced $1.00 or above it will be 
charged the Exchange's standard fee for removing liquidity from the 
BATS Book ($0.0025 per share); to the extent a BATS Only BOLT Order 
adds liquidity to the BATS Book in securities priced $1.00 or above it 
will receive the Exchange's standard $0.0024 per share rebate for 
adding liquidity.
    Similarly, BATS Only BOLT Orders in securities priced below $1.00 
will be treated in the same manner as all other such orders priced 
below $1.00 submitted to the Exchange. Specifically, for executions on 
the Exchange, the Exchange does not propose to provide any rebates for 
BATS Only BOLT Orders that add liquidity to the BATS Book in securities 
priced below $1.00 nor does the Exchange propose to charge a fee for 
BATS Only BOLT Orders that remove liquidity in securities priced below 
$1.00.
    Orders subject to BOLT Routing in securities priced below $1.00 
will also be treated in the same manner as all other such orders priced 
below $1.00 submitted to the Exchange (i.e., no rebate and no charge). 
With respect to orders subject to BOLT Routing in securities priced 
below $1.00 that are routed and executed at an away trading center, 
such orders will be charged fees applicable to all other routed orders 
in securities priced below $1.00 (e.g., $0.0020 charge per share for 
shares executed at a dark liquidity venue, or ``DART'' routing; 0.25% 
charge of the total dollar value for executions occurring through CYCLE 
or RECYCLE routing). Thus, as set forth above, the Exchange has not 
proposed any changes to its fee schedule related to BATS Only BOLT 
Orders priced at any limit price, or orders subject to BOLT Routing in 
securities priced below $1.00.
    To the extent an order subject to BOLT Routing removes liquidity 
from the BATS Book prior to entering the variable BOLT display period 
in securities priced $1.00, such order will be charged the Exchange's 
standard fee for removing liquidity from the BATS Book ($0.0025 per 
share). In addition, orders subject to BOLT Routing in securities 
priced $1.00 or above that are routed and executed at an away trading 
center after the variable BOLT display period will be charged the 
Exchange's standard routing fees. Thus, the Exchange has not proposed 
any changes to its fee schedule for orders subject to BOLT Routing that 
remove liquidity from the BATS Book or that execute after routing to an 
away trading center. However, with respect to orders subject to BOLT 
Routing that execute on the Exchange during the pre-routing variable 
BOLT display period, the Exchange proposes to pay Members a $0.0015 per 
share rebate. The Exchange proposes to reflect this new rebate on the 
revised fee schedule.
    As explained in the Exchange's rule filing, the Exchange expects to 
have technological changes in place to support the proposed rule change 
on or about June 5, 2009. Accordingly, although the changes to the fee 
schedule proposed in this filing will become operative on June 1, 2009, 
the fees and rebates applicable to BOLT will not be charged or paid to 
Members until BOLT is implemented by the Exchange.
(ii) BATS + NYSE ARCA Destination Specific Orders
    The Exchange currently charges a consistent, discounted fee for 
Destination Specific Orders routed to certain of the largest market 
centers measured by volume (NYSE, NYSE Arca and NASDAQ), which, in each 
instance is $0.0001 less per share for orders routed to such market 
centers by the Exchange than such market centers currently charge for 
removing liquidity (referred to by the Exchange as ``One Under'' 
pricing). NYSE Arca recently announced an increase to its liquidity 
removal fee from $0.0028 per share to $0.0030 per share in Tape A and 
Tape C securities.\6\ In order to maintain its One Under pricing with 
respect to Destination Specific Orders routed to NYSE Arca, BATS 
proposes to charge $0.0029 per share for BATS + NYSE ARCA Destination 
Specific Orders executed at NYSE Arca in Tape A or Tape C securities. 
The Exchange's ``One Under'' pricing does not apply to

[[Page 27583]]

securities priced below $1.00 nor does it apply to odd lot orders 
routed to NYSE Arca; such order types will continue to be priced as set 
forth on the Exchange's fee schedule. In addition, the Exchange will 
maintain the pricing currently charged by the Exchange for BATS + NYSE 
ARCA Destination Specific Orders for Tape B securities and for all 
other Destination Specific Orders.
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    \6\ See NYSE Arca Client Notice (May 19, 2009), available at 
http://www.nyse.com/pdfs/NYSEArca_Fee_Notice_6109.pdf.
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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.\7\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\8\ 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. Finally, the Exchange believes that 
the proposed rates are equitable in that they apply uniformly to all 
Members.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 \9\ and Rule 19b-
4(f)(2) thereunder,\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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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-2009-017 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2009-017. This file 
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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such 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 publicly available. All 
submissions should refer to File Number SR-BATS-2009-017 and should be 
submitted on or before July 1, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13553 Filed 6-9-09; 8:45 am]
BILLING CODE 8010-01-P