[Federal Register Volume 78, Number 132 (Wednesday, July 10, 2013)]
[Notices]
[Pages 41453-41455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16532]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69933; File No. SR-BATS-2013-040]


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.

July 3, 2013.
    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 June 28, 2013, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
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 BATS Rules 
15.1(a) and (c). While changes to the fee schedule pursuant to this 
proposal will be effective upon filing, the changes will become 
operative on July 1, 2013.
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    \5\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
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    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 purpose of the proposed rule change is to begin charging a 
monthly fee for the Multicast PITCH Spin Server Port and GRP Port, each 
of which are logical ports \6\ used to receive data from the 
Exchange.\7\ Currently, the Exchange charges a monthly fee for all 
other port types used to enter orders in the Exchange's system and to 
receive data from the Exchange; \8\ however, for both BATS Equities and 
BATS Options,\9\ the Exchange provides 32 primary Multicast PITCH Spin 
Server Ports free of charge (32 ports currently makes a complete set of 
Spin Server Ports) and, if such ports are used, one free primary GRP 
Port. In addition, all redundant Multicast PITCH Spin Server Ports and 
GRP Ports are provided free of charge.\10\ Currently, the Exchange 
charges $400 per month per additional set of primary Multicast PITCH 
Spin Server Ports and $400 per month per additional primary GRP Port.
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    \6\ A logical port is commonly referred to as a TCP/IP port, and 
represents a port established by the Exchange within the Exchange's 
system for trading and billing purposes. Each logical port 
established is specific to a Member or non-member and grants that 
Member or non-member the ability to operate a specific application, 
such as FIX order entry or Multicast PITCH data receipt. Logical 
port fees are limited to logical ports in the Exchange's primary 
data center and no logical port fees are assessed for redundant 
secondary data center ports.
    \7\ BATS FIX ports are the only ports that may be used to send 
orders and related instructions to the Exchange. All other port 
types, including the Multicast PITCH Spin Server Port and GRP Port, 
permit Members and non-members to receive information from the 
Exchange.
    \8\ The Exchange currently charges a monthly fee for all other 
Exchange FIX, FIXDROP, BOE, DROP, TCP PITCH, and TOP ports.
    \9\ BATS Equities is the Exchange's platform for trading cash 
equity securities whereas BATS Options is the Exchange's platform 
for trading equity options.
    \10\ Exchange Multicast PITCH data feed for both BATS Equities 
and BATS Options is currently offered through two primary feeds, 
identified as the ``A feed'' and the ``C feed'', which contain the 
same information but differ only in the way such feeds are received. 
The Exchange offers for free the ports necessary to receive the 
Exchange's redundant Multicast ``B feed'' and ``D feed'', as well as 
all ports made available in the Exchange's secondary data center. 
Accordingly, this proposal only applies to ports used to receive an 
Exchange primary Multicast Feed at the Exchange's primary data 
center.
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    Beginning July 1, 2013, the Exchange proposes to charge $400 per 
month per set of primary Multicast PITCH Spin Server Ports and $400 per 
month per primary GRP Port for BATS Equities and BATS Options. The 
Exchange is also proposing to eliminate the reference to the exact 
number of ports that makes a complete set of Multicast Spin Server 
Ports, as this number has changed in the past and could again change in 
the future. A complete set of Multicast Spin Server Ports is the number 
of ports necessary to get one full set of information from the Exchange 
based on load balancing by the Exchange.\11\ The Exchange believes that 
this concept is clearly understood amongst recipients of Multicast 
data, and, therefore, does not believe that eliminating the fee 
schedule reference to the exact number of ports necessary to receive 
Exchange PITCH data via Multicast will cause

[[Page 41454]]

confusion amongst recipients of Multicast data.
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    \11\ The Exchange load balances information regarding securities 
traded on the Exchange across multiple channels (today 32) with each 
channel requiring a separate Multicast PITCH Spin Server Port.
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    Based on the proposal, the change applies to Members that obtain 
ports for direct access to the Exchange, Sponsored Participants 
sponsored by Members to receive direct access to the Exchange, non-
member service bureaus that act as a conduit for orders entered by 
Exchange Members that are their customers, and market data recipients.
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.\12\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\13\ 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.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange operates in a highly competitive market in which 
exchanges offer connectivity services as a means to facilitate the 
trading activities of members and other participants. Accordingly, fees 
charged for connectivity are constrained by the active competition for 
the order flow of such participants as well as demand for market data 
from the Exchange. If a particular exchange charges excessive fees for 
connectivity, affected members will opt to terminate their connectivity 
arrangements with that exchange, and adopt a possible range of 
alternative strategies, including routing to the applicable exchange 
through another participant or market center or taking that exchange's 
data indirectly. Accordingly, the exchange charging excessive fees 
would stand to lose not only connectivity revenues but also revenues 
associated with the execution of orders routed to it by affected 
members, and, to the extent applicable, market data revenues. The 
Exchange believes that this competitive dynamic imposes powerful 
restraints on the ability of any exchange to charge unreasonable fees 
for connectivity.
    The Exchange believes that its proposed changes to logical port 
fees are reasonable in light of the benefits to Exchange participants 
of direct market access and receipt of data.\14\ In addition, the 
Exchange believes that its fees are equitably allocated among Exchange 
constituents based upon the number of access ports that they require to 
receive data from the Exchange. Further, the Exchange believes that its 
fees are not unreasonably discriminatory because all market 
participants are charged standard fees for port usage. The Exchange 
notes that it believes its prior fee structure, under which ports 
necessary for receipt of Multicast data were provided free of charge, 
was reasonable, equitably allocated and not unreasonably discriminatory 
because it was available to all market participants and was intended to 
encourage the use of Multicast PITCH. However, by moving towards a more 
uniform approach to ports billing, the Exchange believes that its fees 
are even more equitably allocated and nondiscriminatory. The Exchange 
also believes that its fees for access services will enable it to 
better cover its infrastructure costs and to improve its market 
technology and services.
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    \14\ Through a different filing, beginning July 1, 2013, the 
Exchange has proposed to implement fees for the BATS Equities PITCH 
(including both TCP PITCH and Multicast PITCH) and TOP data 
products, and to revise the fee for the Last Sale Feed data product.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. As discussed above, the 
Exchange believes that fees for connectivity are constrained by the 
robust competition for order flow among exchanges and non-exchange 
markets. Further, excessive fees for connectivity, including logical 
port fees, would serve to impair an exchange's ability to compete for 
order flow rather than burdening competition.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 \15\ and paragraph (f) of Rule 19b-4 
thereunder.\16\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BATS-2013-040 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-2013-040. 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 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 available publicly. All 
submissions should refer to File Number SR-BATS-

[[Page 41455]]

2013-040 and should be submitted on or before July 31, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16532 Filed 7-9-13; 8:45 am]
BILLING CODE 8011-01-P