[Federal Register Volume 80, Number 13 (Wednesday, January 21, 2015)]
[Notices]
[Pages 2989-2991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00835]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74050; File No. SR-BYX-2015-01]


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

January 14, 2015.
    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 January 2, 2015, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'') 
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 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 proposal to amend the fee schedule applicable 
to Members \3\ and non-members of the Exchange pursuant to BYX Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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    \3\ 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 modify its fee schedule effective 
immediately in order to: (1) adopt pricing for the Exchange's 
historical market data; (2) adopt physical connection fees; and (3) add 
Membership Fees.

Historical Market Data

    The Exchange proposes to begin charging a fee for providing 
historical data to data recipients upon request. The Exchange currently 
provides historical data upon request on an ad hoc basis, but proposes 
to begin charging a fee due to the infrastructure costs of storing and 
providing such data. As proposed, the Exchange will begin to charge for 
the following three products through either of these distribution 
methods: (1) Historical top of book data from the Exchange's TOP data 
feed (``Historical TOP Data''), (2) historical data from the Exchange's 
PITCH data feed (``Historical PITCH Data''), and (3) historical 
transaction data from the Exchange's Last Sale Feed (``Historical Last 
Sale Data''), which are described in Exchange Rule 11.22(h). The 
Exchange notes that the same historical data products are offered for a 
fee by other market centers, including BATS Exchange, Inc. (``BZX''), 
which are offered for the same prices as those proposed herein.\4\
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    \4\ See Securities Exchange Act Release No. 61885 (April 9, 
2010), 75 FR 20018 (April 16, 2010) (SR-BATS-2010-002).
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    The proposed cost of user-accessible BYX Historical TOP Data, BYX 
Historical PITCH Data or BYX Historical Last Sale Data is $500 per 
month of data accessed by any individual user. The Exchange's databases 
will contain up to 90 days of data at any point in time. For data that 
the Exchange provides on an external hard drive to a market participant 
the proposed cost is $2,500 per 1 terabyte (TB) drive generated by the 
Exchange. Each of the proposed costs set forth above applies per data 
product. For instance, an individual user that obtained access to BYX 
Historical Top Data would pay $500 for access to a particular month's 
data, and if that user also wanted access to BYX Historical Last Sale 
Data, the individual user would need to pay another $500 for such 
access. Similarly, a market participant would pay $2,500 for an 
external hard drive containing BYX Historical TOP Data that fits on a 1 
TB drive (internal use only); such participant would have to pay 
separately for a 1 TB drive containing BYX Historical Last Sale Data or 
BYX Historical PITCH Data.

Membership Fees

    The Exchange is also proposing to charge an Annual Membership Fee 
for Members of the Exchange of $2,500, which will support their 
Exchange membership for the calendar year. The fee will be charged per 
Member firm. Beginning in January 2015, the Exchange plans to charge an 
Annual Membership Fee which will be assessed on all Members as of a 
date determined by the Exchange in January of each year. For any month 
in which a firm is approved for membership with the Exchange after the 
January renewal period, the Annual Membership Fee will be pro-rated 
beginning on the date on which membership is approved and based on the 
number of remaining trading days in that year. The fee will be assessed 
in the month following membership approval. For example, if a firm 
applies and is accepted for membership with the Exchange on February 
15, 2015, the new Member will be assessed a pro-rated Annual Membership 
Fee for the period beginning on February 15 through the end of 2015. 
The fee will be assessed in the next month's billing cycle, which in 
this case, would be March 2015. Such fees will be non-refundable. 
However, where a Member is pending a voluntary termination of rights as 
a Member pursuant to Rule 2.8 prior to the date any Annual Membership 
Fee for a given year will be assessed (i.e., January 1, 2015) and the 
Member does not utilize the facilities of the Exchange while such 
voluntary termination of rights is pending, then the Member will not be 
obligated to pay the Annual Membership Fee. The Exchange believes this 
to be appropriate because there is

[[Page 2990]]

ordinarily a 30 day waiting period before such resignation shall take 
effect.

Physical Connection Fees

    The Exchange is also proposing to adopt fees for physical 
connections that are identical to those charged by BZX. The Exchange 
currently maintains a presence in two third-party data centers: (i) The 
primary data center where the Exchange's business is primarily 
conducted on a daily basis, and (ii) a secondary data center, which is 
predominantly maintained for business continuity purposes. The Exchange 
does not currently charge any fees for physical connections to the 
Exchange. The Exchange currently offers both 1G and 10G connections and 
both are available at the primary and secondary data centers as well as 
through points of presence (``PoPs'').
    The Exchange proposes to charge physical connection fees on a 
monthly basis as follows: $1,000/month for any 1G physical port to 
connect to the Exchange in the primary or secondary data center; 
$2,000/month for any 1G physical port to connect to the Exchange in any 
data center where the Exchange maintains a PoP other than the 
Exchange's primary or secondary data center; $2,500/month for any 10G 
physical port to connect to the Exchange in the primary or secondary 
data center; and $5,000/month for any 10G physical port to connect to 
the Exchange in any data center where the Exchange maintains a PoP 
other than the Exchange's primary or secondary data center. The 
proposed fees for PoP connectivity is [sic] higher than the fees for 
connectivity in the Exchange's primary and secondary data centers due 
to the increased infrastructure costs of maintaining the PoP, including 
the necessary connectivity maintained by the Exchange from such PoP to 
the Exchange's data centers. Similarly, the proposed fees for 10G 
connectivity is [sic] higher than the fees for 1G connectivity due to 
the further infrastructure costs associated with providing the 
additional bandwidth for 10G physical ports. The Exchange is also 
proposing to pass through in full any fees or costs in excess of $1,000 
incurred by the Exchange to complete a cross-connect. The Exchange does 
not anticipate that passing through these expenses will affect many of 
the Exchange's constituents, because the majority of cross-connect 
completions cost less than $1,000. For this reason, the Exchange 
proposes to pass-through the charges associated with cross-connect 
completions that cost more than $1,000 rather than to subsidize these 
expensive completions by charging an installation fee for all 
completions regardless of their cost.
    The Exchange proposes to implement the amendments to its fee 
schedule effective January 2, 2015.
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.\5\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Sections 6(b)(4) of the Act and 6(b)(5) of the Act,\6\ 
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.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that charging fees for providing historical 
data is reasonable and equitable because 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 that 
customers do purchase the data products, the revenue generated will 
offset the Exchange's fixed costs of operating and regulating a highly 
efficient and reliable platform for the trading of U.S. equities. It 
will also help the Exchange cover its costs in developing and running 
that platform, as well as ongoing infrastructure costs. The Exchange 
believes that these fees are non-discriminatory in that they are 
optional and apply uniformly to all data recipients irrespective of 
each recipient's relationship to the Exchange (e.g., Member, non-Member 
data recipient, etc.).
    The Exchange also believes that assessing an Annual Membership Fee 
provides an equitable allocation of reasonable dues, fees and other 
charges among its Members and other persons using its facilities. The 
Exchange makes all services and products subject to these fees 
available on a non-discriminatory basis to similarly situated 
recipients. The Exchange believes that the Annual Membership Fee is a 
reasonable and equitable method of ensuring that its fees fund a 
greater portion of the cost of regulating activity on the Exchange, and 
that even after assessing these fees, the overall cost of Exchange 
membership is reasonable as compared with the costs of membership in 
other SROs.\7\ The Exchange believes that the proposed addition of an 
Annual Membership Fee is non-discriminatory in that it applies 
uniformly to all Members.
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    \7\ See, e.g., NASDAQ Rule 7001(a) (assessing an [sic] $3,000 
annual membership fee); see also New York Stock Exchange Price List 
2015, at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf (assessing a $40,000 annual trading license fee 
for the first two licenses held by a member organization).
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    Finally, the Exchange believes that the proposed changes to adopt 
fees for physical connections are reasonable and equitable in that the 
proposal will help the Exchange to cover increasing infrastructure 
costs associated with maintaining the primary and secondary data 
centers as well as the PoPs. Further, such proposed pricing is 
identical to those fees charged by BZX.\8\ To that end, the Exchange 
believes that the proposed fees for physical connections to the 
Exchange are reasonable and equitable in that they are in the same 
range as analogous fees charged by other such exchanges. In addition, 
maintaining similar pricing to that of BZX is reasonable because it 
will be easy to understand for all Members of the Exchange that are 
also members of BZX. The Exchange believes that the proposed addition 
of physical connection fees is non-discriminatory in that it applies 
uniformly to all market participants that seek physical access to the 
Exchange.
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    \8\ See BZX Fee Schedule.
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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 
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 proposed changes will 
allow the Exchange to compete more ably with other execution venues by 
charging competitive prices for both physical connectivity and 
historical data, which will allow the Exchange to more effectively 
operate and update the infrastructure associated with such offerings, 
which the Exchange believes will, in the long term, allow the Exchange 
to provide more desirable offerings to its customers in connectivity, 
historical data, and otherwise.

[[Page 2991]]

    The Exchange's proposed membership fees will be lower than the cost 
of membership on other exchanges,\9\ and therefore, may stimulate 
intramarket competition by attracting additional firms to become 
Members on the Exchange. In addition, membership fees are subject to 
competition from other exchanges. Accordingly, if the changes proposed 
herein are unattractive to market participants, it is likely the 
Exchange will see a decline in membership and/or trading activity as a 
result. The proposed fee change will not impact intermarket competition 
because it will apply to all Members equally. 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 [sic] deem fee structures, including Annual Membership Fees, to 
be unreasonable or excessive.
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    \9\ See supra note 7.
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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\10\ and paragraph (f) of Rule 19b-4 
thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-BYX-2015-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BYX-2015-01. 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 offices 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-BYX-2015-01, 
and should be submitted on or before February 11, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00835 Filed 1-20-15; 8:45 am]
BILLING CODE 8011-01-P