[Federal Register Volume 78, Number 170 (Tuesday, September 3, 2013)]
[Notices]
[Pages 54338-54340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21295]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70264; File No. SR-BATS-2013-045]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish a Revenue Sharing Program

August 27, 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 August 15, 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 and 
II below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposed rule change to establish a revenue 
sharing program with Interactive Data Corporation, acting by and 
through its division, Interactive Data Desktop Solutions, and its 
subsidiary, Interactive Data Online Properties, Inc. (collectively 
``IDC''), whereby the Exchange will make available, through IDC, 
private labeled versions of IDC's Market-Q and LiveCharts products.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to establish a non-
exclusive revenue sharing program with IDC whereby the Exchange will 
make available new market data offerings consisting of private labeled 
versions of IDC's Market-Q and LiveCharts products. Pursuant to an 
agreement between IDC and the Exchange, the private labeled products 
will be marketed by the Exchange by featuring and advertising them on 
the Exchange's Web site. Market-Q will be marketed under the private 
label name ``BATS Investor Pro'' and LiveCharts will be marketed under 
the private label name ``BATS Investor RT'' (BATS Investor Pro and BATS 
Investor RT, collectively, the ``Private Labeled Products''). Under the 
agreement, the Exchange will receive 25% of the total monthly 
subscription fees received by IDC from parties who have registered to 
use the Private Labeled Products and who first subscribe as a result of 
the Exchange's marketing activities under the agreement, less certain 
fees and taxes. IDC will operate and maintain the Private Labeled 
Products and will provide first line technical support, accounting and 
contract administration services for the Private Labeled Products. The 
Exchange will not bill or contract with any subscriber directly.
    Market-Q, which was developed by IDC, is a browser-based, front-end 
product that provides global real-time pricing information, corporate 
actions and dividend data, news, research, and other financial and 
market data, including charts and alerts. The data includes a broad 
range of global exchanges and indices, including performance data, 
historical pricing, fixed income, commodities, foreign exchange, 
exchange-traded equity and derivative securities.\3\ LiveCharts, which 
was also developed by IDC, is a browser-based, front-end product that 
provides charting and technical analysis of global real-time market 
data.\4\ BATS Investor Pro and BATS Investor RT will include only 
market data from the Exchange.\5\
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    \3\ http://www.interactivedata.com/uploads/File/MArketQ.pdf.
    \4\ http://www.esignal.com/livecharts/default.aspx.
    \5\ Subscribers of BATS Investor Pro and BATS Investor RT may, 
for an additional fee, supplement their subscriptions to include 
market data in addition to Exchange data. This fee is not included 
as part of the Exchange's revenue sharing program with IDC.

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[[Page 54339]]

    The Exchange intends to submit a separate proposed rule change with 
pricing details for the Private Labeled Products.
    Various data recipients may wish to subscribe to and use the 
Private Labeled Products. For instance, data recipients that receive 
real-time market information on public Web sites or subscribe to 
dynamic stock tickers, portfolio trackers, price/time graphs and other 
visual systems can use the Private Labeled Products in lieu of using 
such products. Such data recipients may prefer the Private Labeled 
Products to view Exchange data to the extent they are familiar with 
such products that include data from other markets. The Exchange notes 
that similar market data products are offered by IDC containing data 
from other exchanges and market centers.
    No Exchange participant is required to subscribe to the Private 
Labeled Products because the same information is available in the 
Exchange's other data feeds.\6\ Exchange participants can also gain 
access to BATS quotations and last sale prices that are integrated with 
the prices that other markets make available through the Security 
Information Processors (``SIPs'') for the national market system plans 
responsible for disseminating consolidated market information. Indeed, 
even though the Private Labeled Products may provide to some 
participants an efficient alternative to the consolidated price 
information that investors and broker-dealers can receive on a 
consolidated basis from the SIPs, the Exchange believes that the 
information that the Exchange contributes to the consolidated tape and 
the increasingly lower latency of the data feeds offered by the SIPs 
will continue to satisfy the needs of the vast majority of individual 
and professional investors. Although certain data recipients might 
supplement their access to data by subscribing to the Private Labeled 
Products, it is unlikely that data recipients or distributors will 
replace the consolidated feeds provided by the SIPs and/or their direct 
access to BATS data feeds as a result of the availability of the 
Private Labeled Products. The Exchange represents that it will not 
distribute information to IDC for inclusion in the Private Labeled 
Products on a more timely basis than it makes available the data to all 
Exchange participants that receive such data feeds or that is provided 
to the SIPs for consolidation and dissemination, nor will IDC have any 
special or different access to the Exchange's data as a result of IDC's 
arrangement with the Exchange. In addition, the Exchange represents 
that IDC has not (and will not) receive any preferential treatment as a 
result of IDC's arrangement with the Exchange.
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    \6\ The Exchange currently offers various data feeds, including, 
but not limited to, TCP PITCH and Multicast PITCH, which are depth 
of book data feeds containing real-time quotation and transaction 
data from the Exchange; DROP, which contains order execution and 
other information (e.g., modifications and cancellations) specific 
to the Exchange activity of one or more Exchange participants; and 
TOP, which contains real-time top of book quotation and transaction 
information from the Exchange. Beginning July 1, 2013, the Exchange 
implemented fees for the PITCH (including both TCP PITCH and 
Multicast PITCH) and TOP data products, and revised the fee for the 
Last Sale Feed data product. The Exchange continues to offer its 
other market data products to data recipients free of charge.
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    All Exchange participants, including IDC, that receive BATS data 
directly from the Exchange pay connectivity fees to access such data 
through logical and physical ports connected to the Exchange's systems. 
Beginning July 1, 2013, the Exchange implemented fees for the PITCH 
(including both TCP PITCH and Multicast PITCH) and TOP data products, 
and revised the fee for the Last Sale Feed data product. Accordingly 
all Exchange participants, including IDC, are charged standard fees for 
the receipt, use or redistribution of such data feeds. The Exchange 
continues to offer its other market data products to data recipients 
free of charge. Under the new agreement with IDC, IDC will continue to 
receive any of the various BATS data feeds that it currently subscribes 
to on the same terms as other Exchange participants, and will continue 
to pay any port fees that it currently pays to the Exchange to receive 
such data feeds. Additionally, beginning July 1, 2013, IDC became 
subject to data fees payable to the Exchange for such data feeds on the 
same terms as all other Exchange participants that receive, use or 
redistribute BATS data from the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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. The Exchange believes the 
proposed rule will allow Exchange participants to make better-informed 
and more efficient trading decisions by making available the Private 
Labeled Products. In addition, the Exchange notes that the revenue 
sharing program is not exclusive as between the Exchange and IDC. Any 
recipient of BATS data feeds is permitted to redistribute such data, 
whether through a revenue sharing arrangement with BATS or otherwise, 
or provide products and services similar to those being offered by IDC, 
provided that such recipient (including IDC) has entered into the 
required contractual arrangements with the Exchange.\9\
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Recipients of BATS data feeds, either directly from the 
Exchange or from a third-party data vendor, that seek to 
redistribute such data, either internally or externally, are 
required to execute a BATS Global Markets, Inc. Data Agreement, an 
Exchange Data Feed Order Form and System Description, List of 
Affiliates (if applicable), and Service Facilitator List (if 
applicable).
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    Lastly, these products are completely optional in that no consumer 
is required to purchase any of them and only those consumers that deem 
such products to be of sufficient overall value and usefulness will 
purchase them. To the extent consumers do purchase the Private Labeled 
Products, the revenue generated will offset the Exchange's fixed costs 
of operating and regulating its trading platforms, including the 
continued operation of data feeds that will supply data to be used in 
the Private Labeled Products. It will also help the Exchange cover its 
costs in developing and running that platform, as well as ongoing 
infrastructure costs.

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

    The proposed rule change does not impose any burden on competition 
not necessary or appropriate in furtherance of the purposes of the Act. 
As discussed above, similar market data products are offered by IDC 
containing data from other exchanges and market centers. Further, the 
revenue sharing program is not exclusive as between the Exchange and 
IDC. Any recipient of BATS data feeds is permitted to redistribute such 
data, whether through a revenue sharing arrangement with BATS or 
otherwise, or provide products and services similar to those being 
offered by IDC, provided that such recipient (including IDC) has 
entered into the required contractual arrangements with the Exchange. 
The Exchange represents that it will not distribute information to IDC 
for inclusion in the Private Labeled

[[Page 54340]]

Products on a more timely basis than it makes available the data to all 
Exchange participants that receive such data feeds or that is provided 
to the SIPs for consolidation and dissemination, nor will IDC have any 
special or different access to the Exchange's data as a result of IDC's 
arrangement with the Exchange. In addition, the Exchange represents 
that IDC has not (and will not) receive any preferential treatment as a 
result of IDC's arrangement with the Exchange.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii), 
the Exchange is required to provide the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Commission has determined to waive the requirement that BATS provide 
the Commission with written notice of its intent to file the 
proposed rule change at least five business days prior to the filing 
date.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposed rule change may become operative upon filing. The Exchange 
believe that such a waiver would allow it to immediately offer the 
Private Labeled Products to market participants enabling them to make 
better-informed and more efficient trading decisions. In addition, the 
Exchange notes that the Private Labeled Products are optional and can 
be used by a wide variety of market participants for a wide variety of 
purposes. For these reasons, the Commission designates the proposed 
rule change to be operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ Rule 19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-2013-045 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-2013-045. 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-BATS-2013-045, and should be 
submitted on or before September 24, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21295 Filed 8-30-13; 8:45 am]
BILLING CODE 8011-01-P