[Federal Register Volume 79, Number 245 (Monday, December 22, 2014)]
[Notices]
[Pages 76432-76435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29814]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73845; File No. SR-BATS-2014-066]


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

December 16, 2014.
    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 December 3, 2014, 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

[[Page 76433]]

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). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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    \5\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
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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 Exchange proposes to make a number of clarifying, non-
substantive changes to the ``Options Pricing'' section of its fee 
schedule effective immediately, in order to convert the existing fee 
schedule into a chart format. The Exchange has already made similar 
changes to the equities portion of the fee schedule and is now 
proposing to make such changes as they relate to the fees and rebates 
applicable to activity on the Exchange's options platform (``BATS 
Options''). The Exchange believes that these changes will provide 
greater transparency to Members about how the Exchange assesses fees 
and calculates rebates, as well as allowing Members to more easily 
validate their bills on a monthly basis. The Exchange notes that none 
of these changes substantively amend any fee or rebate, nor do they 
alter the manner in which the Exchange assesses fees or calculates 
rebates. Specifically, the Exchange is proposing the following:
     To more clearly separate pricing applicable to BATS 
Options from the Exchange's current fee schedule, which will remain 
applicable to the Exchange's equities trading platform (``BATS 
Equities''). Although the Exchange has always maintained a single fee 
schedule applicable to BATS Options and BATS Equities, the Exchange 
believes that separating the fee schedules will reduce potential 
confusion. Accordingly, in addition to the header of the fee schedule, 
the Exchange proposes to adopt a new effective date for the proposed 
BATS Options fee schedule but to retain the existing effective date for 
BATS Equities pricing.
     To make clear that rebates are indicated by parentheses.
     To state the following: The rates listed in the Standard 
Rates table apply unless a Member's transaction is assigned a fee code 
other than a standard fee code. If a Member's transaction is assigned a 
fee code other than a standard fee code, the rates listed in the Fee 
Codes and Associated Fees table will apply. Footnotes provide further 
explanatory text or, where annotated to fee codes, indicate variable 
rate changes, provided the conditions in the footnote are met.
     To add a section and chart titled ``Standard Rates,'' 
which will include the standard fees and rebates for Penny Pilot 
securities, Non-Penny Pilot securities, and Mini Options for each order 
capacity, including Customer, Professional, Firm, and Market Maker.
     To add a section titled ``Fee Codes and Associated Fees,'' 
which will include the fee or rebate, fee code, and a description for 
each possible execution that could occur on the Exchange or on another 
venue.
     To add a section titled ``Definitions,'' which will 
include definitions that are defined in the current fee schedule. These 
include the definitions listed below, which are identical to 
definitions contained on the Exchange's current fee schedule, with the 
exception that the Exchange has combined the definitions of Options 
Step-Up Add TCV and September Options Step-Up Add TCV into Options 
Step-Up Add TCV without specifying a baseline month. Instead, the 
Exchange has proposed to specify the baseline month in the portion of 
the fee schedule where the Options Step-Up Add TCV is applicable, which 
the Exchange believes will help to avoid potential confusion between 
applicable step-up tiers. ``ADAV'' means average daily added volume 
calculated as the number of contracts added and ``ADV'' means average 
daily volume calculated as the number of contracts added or removed, 
combined, per day. ADAV and ADV are calculated on a monthly basis, 
excluding contracts added or removed on any day that the Exchange's 
system experiences a disruption that lasts for more than 60 minutes 
during regular trading hours (``Exchange System Disruption'') and on 
any day with a scheduled early market close. Routed contracts are not 
included in ADAV or ADV calculation. With prior notice to the Exchange, 
a Member may aggregate ADAV or ADV with other Members that control, are 
controlled by, or are under common control with such Member. ``Options 
Step-Up Add TCV'' means ADAV as a percentage of TCV in the relevant 
baseline month subtracted from current ADAV as a percentage of TCV. 
``TCV'' means total consolidated volume calculated as the volume 
reported by all exchanges to the consolidated transaction reporting 
plan for the month for which the fees apply, excluding volume on any 
day that the Exchange experiences an Exchange System Disruption and on 
any day with a scheduled early market close. ``Customer'' applies to 
any transaction identified by a Member for clearing in the Customer 
range at the Options Clearing Corporation (``OCC''), excluding any 
transaction for a ``Professional'' as defined in Exchange Rule 16.1. 
``Firm'' applies to any transaction identified by a Member for clearing 
in the Firm range at the OCC. ``Market Maker'' applies to any 
transaction identified by a Member for clearing in the Market Maker 
range at the OCC. ``Professional'' applies to any transaction 
identified by a Member as such pursuant to Exchange Rule 16.1. ``Penny 
Pilot Securities'' are those issues quoted pursuant to Exchange Rule 
21.5, Interpretation and Policy .01.
     To add a section titled ``General Notes,'' that will 
include the following notes: The Exchange notes that to the extent a 
Member does not qualify for any of the tiers listed below, the rates 
listed in the above section titled Fee Codes and Associated Fees will 
apply; and to the extent a Member qualifies for higher rebates and/or 
lower fees than those provided by a tier for which such Member 
qualifies, the higher rebates and/or lower fees shall apply.
     To add a series of footnotes describing all tiers 
applicable to trading on BATS Options, including Customer Penny Pilot 
Add Tiers, Professional and Firm Penny Pilot Add Tier, Professional, 
Firm and Market Maker

[[Page 76434]]

Penny Pilot Take Tier, NBBO Setter Tiers, and Quoting Incentive Program 
Tiers.
    To add new sections and charts titled ``Options Logical Port Fees'' 
and ``Options Physical Connection Fees,'' which, other than being in 
chart form, will be identical to the current fee schedule. As it 
relates to physical connection fees, the Exchange notes that such fees 
relate only to the total number of physical connections that a Member 
has to the Systems.\6\ More specifically, this means that to the extent 
that a Member has a physical connection to the Exchange that they use 
for the purpose of connecting to both BATS Equities and BATS Options 
Systems, such Member would only be charged for one physical connection. 
Although this information is duplicative, the Exchange believes it is 
important with the proposed bifurcation of fees applicable to BATS 
Equities and BATS Options to include connectivity fees on the fee 
schedule for BATS Options so that Members that have their only or 
primary relationship with BATS Options have easy access to information 
regarding such fees.
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    \6\ System is defined in BATS Rule 1.5(aa) and 16.1(a)(59).
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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 or providers of routing services 
if they deem fee levels to be excessive.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed changes are reasonable and 
equitable because they are non-substantive and the Exchange is not 
changing any fees or rebates that apply to trading activity on BATS 
Options or routed executions. Further, the changes are designed to make 
the fee schedule easier to read and for Members to validate the bills 
that they receive from the Exchange. The Exchange also believes that 
the proposal is non-discriminatory because it applies uniformly to all 
Members, and again, the Exchange is not making any changes to existing 
fees and rebates. Finally, the Exchange believes that the proposed fee 
schedule will be clearer and less confusing for investors and will 
eliminate potential investor confusion, thereby removing impediments to 
and perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. To 
the contrary, the Exchange believes that the changes will both make the 
fee schedule easier to read and simultaneously provide Members with an 
easier way to validate their bills on a monthly basis, both of which 
the Exchange believes are important components of customer service and 
which will allow the Exchange to better compete for order flow. The 
Exchange reiterates that the changes are only to the format of the fee 
schedule and are entirely non-substantive. As stated above, the 
Exchange notes that it operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if the deem fee structures to be unreasonable or excessive.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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 \9\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
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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-2014-066 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2014-066. 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-2014-066 and should be 
submitted on or before January 12, 2015.


[[Page 76435]]


    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29814 Filed 12-19-14; 8:45 am]
BILLING CODE 8011-01-P