[Federal Register Volume 75, Number 37 (Thursday, February 25, 2010)]
[Notices]
[Pages 8769-8770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3822]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61545; File No. SR-BATS-2009-032]


Self-Regulatory Organizations; BATS Exchange, Inc.; Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
To Amend BATS Fee Schedule To Impose Fees for Physical Ports Used To 
Connect to BATS Exchange

February 19, 2010.
    On December 18, 2009, BATS Exchange, Inc. (``BATS'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the fee schedule applicable to Members\3\ 
and non-members of the Exchange to begin charging for certain physical 
ports used to connect to the Exchange's systems. The proposed rule 
change was published for comment in the Federal Register on January 8, 
2010.\4\ The Commission received no comments regarding the proposal. On 
February 9, 2010, the Exchange filed Amendment No. 1 to the proposed 
rule change.\5\ This order grants approval of the proposed rule change, 
as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange. See BATS Rule 1.5(n).
    \4\ Securities Exchange Act Release No. 61260 (December 30, 
2009), 75 FR 1109 (``Notice'').
    \5\ In Amendment No. 1, the Exchange replaced the bracketed 
``[September 1, 2009]'' with ``[February 1, 2010]'' in the proposed 
rule text to reflect the fact that the current fee schedule is dated 
February 1, 2010. Because the change in Amendment No. 1 is technical 
in nature, it is not subject to notice and comment.
---------------------------------------------------------------------------

    BATS proposes to begin charging a monthly fee for certain physical 
ports\6\ used to connect to the Exchange's system for order entry and 
receipt of data from the Exchange.\7\ BATS states that under its 
current policy all physical ports are provided free of charge but 
Members and non-members are only permitted to establish up to four such 
physical port pairs.\8\ Under the proposal, BATS will continue to 
provide four pairs of physical ports without charge to any Member or 
non-member that has been approved to connect to the Exchange. In 
addition, the Exchange will permit Members and non-members to establish 
additional physical ports at a charge of $2,000 for each additional 
single physical port provided by the Exchange to any Member or non-
member in any data center. The proposal applies to all Exchange 
constituents with physical connections, including Members that obtain 
ports for direct access to the Exchange, non-member service bureaus 
that act as a conduit for orders entered by Exchange Members that are 
their customers, Sponsored Participants, and market data recipients.
---------------------------------------------------------------------------

    \6\ The Exchange states that a physical port is used by a Member 
or non-member to literally plug into the Exchange at the data 
centers where the Exchange's servers are located (i.e., either a 
cross-connection or a private line Ethernet connection to the 
Exchange's network within the data center).
    \7\ The Commission notes that BATS will implement the proposed 
physical port fees commencing on the first day of the month 
immediately following Commission approval of this proposed rule 
change (or on the date of approval, if on the first business day of 
a month). See Notice, supra note 4.
    \8\ A ``pair'' of ports refers to one port at the site of the 
Exchange's primary data center (including the expansion space 
located adjacent to such data center) and one port at the site of 
the Exchange's secondary data center.
---------------------------------------------------------------------------

    The Exchange states that very few Members or non-members require 
four physical ports for their operations related to the Exchange or 
would utilize more than four physical ports, and thus, the Exchange 
believes that the proposal should not affect many of the Exchange's 
constituents. However, the Exchange believes that Members and non-
members that wish to pay for additional physical ports outside of those 
provided for free should have the ability to do so.
    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\9\ Specifically, the Commission finds that the proposal is 
consistent with Section 6(b)(4) of the Act,\10\ which requires the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange Members and other persons using the Exchange's facilities, and 
Section 6(b)(5) of the Act,\11\ which requires, among other things, 
that the rules of a national securities exchange be designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest, 
and not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Commission also finds that the 
proposed rule change is consistent with Section 6(b)(8) of the Act,\12\ 
which requires that the rules of an exchange not impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. Finally, the Commission finds that the proposed rule change 
is consistent with Rule 603(a) of Regulation NMS,\13\ which requires an 
exclusive processor that distributes information with respect to 
quotations for or transactions in an NMS stock to do so on terms that 
are fair and reasonable and not unreasonably discriminatory.
---------------------------------------------------------------------------

    \9\ In approving this proposed rule change the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(8).
    \13\ 17 CFR 242.603(a).
---------------------------------------------------------------------------

    The Commission believes that the proposed physical port fees are 
equitably allocated among Members and

[[Page 8770]]

non-members and do not unfairly or unreasonably discriminate between 
customers, issuers, brokers, or dealers because the proposed physical 
port fees do not distinguish among the type of participant but rather 
are the same for all Members and non-members. The Commission also 
believes that BATS was subject to significant competitive pressure to 
act equitably, fairly, and reasonably in setting the physical port 
fees, in light of the highly competitive nature of the market for 
execution and routing services.\14\
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-BATS-2009-032), as modified 
by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3822 Filed 2-24-10; 8:45 am]
BILLING CODE 8011-01-P