[Federal Register Volume 80, Number 135 (Wednesday, July 15, 2015)]
[Notices]
[Pages 41522-41528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17294]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75406; File No. SR-BATS-2015-48]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Market Data Section of Its Fee Schedule

July 9, 2015.
    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 July 1, 2015, 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

[[Page 41523]]

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 Market Data section of 
its fee schedule to: (i) Adopt User fees, an Enterprise fee, and a 
Digital Media Enterprise fee for the BZX Top and BZX Last Sale feeds; 
and (ii) make a non-substantive change to the description of the BATS 
One Feed Enterprise Fee as well as correct a cross-reference within the 
definition of ``Non-Professional User''.
    The text of the proposed rule change is available at the Exchange's 
Web site at 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 amend the Market Data section of its fee 
schedule to: (i) Adopt User fees, an Enterprise fee, and a Digital 
Media Enterprise fee for the BZX Top and BZX Last Sale feeds; and (ii) 
make a non-substantive change to the description of the BATS One Feed 
Enterprise Fee as well as correct a cross-reference within the 
definition of ``Non-Professional User''.
BZX Top and Last Sale Fees
    BZX Top is a market data feed that includes top of book quotations 
and execution information for all equity securities traded on the 
Exchange.\5\ BZX Last Sale is a market data feed that includes last 
sale information for all equity securities traded on Exchange.\6\
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    \5\ See Exchange Rule 11.22(d).
    \6\ See Exchange Rule 11.22(g).
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    Currently, the Exchange only charges fees for both internal and 
external distribution of the BZX Last Sale and BZX Top feeds. The cost 
of BZX Last Sale for an Internal Distributor \7\ is $500 per month. 
Likewise, the cost of BZX Top for an Internal Distributor is also $500 
per month. The Exchange currently does not charge per User \8\ fees for 
either BZX Last Sale or BZX Top. Therefore, the Exchange does not 
currently require an External Distributor \9\ of BZX Last Sale or BZX 
Top to count, classify (e.g., professional or non-professional), or 
report to the Exchange information regarding the customers to which 
they provide the data. Instead, the Exchange charges an External 
Distributor of BZX Last Sale a flat fee of $2,500 per month. The 
Exchange also separately charges an External Distributor of BZX Top a 
flat fee of $2,500 per month. End Users currently do not pay the 
Exchange for BZX Last Sale or BZX Top, nor are End Users required to 
enter into contracts with the Exchange.
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    \7\ An ``Internal Distributor'' is defined as ``a Distributor 
that receives the Exchange Market Data product and then distributes 
that data to one or more Users within the Distributor's own 
entity.'' See the Exchange Fee Schedule available at http://batstrading.com/support/fee_schedule/bzx/. A ``Distributor'' is 
defined as ``any entity that receives the Exchange Market Data 
product directly from the Exchange or indirectly through another 
entity and then distributes it internally or externally to a third 
party.'' Id.
    \8\ A ``User'' is defined as ``a natural person, a 
proprietorship, corporation, partnership, or entity, or device 
(computer or other automated service), that is entitled to receive 
Exchange data.'' Id.
    \9\ An ``External Distributor'' is defined as ``a Distributor 
that receives the Exchange Market Data product and then distributes 
that data to a third party or one or more Users outside the 
Distributor's own entity.'' Id.
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    Subscribers to either BZX Top or BZX Last Sale are able to receive, 
upon request and at no additional cost, BZX Last Sale or BZX Top, as 
applicable. The Exchange also offers a New External Distributor Credit 
under which new External Distributors of BZX Top or BZX Last Sale will 
not be charged a Distributor Fee for their first three (3) months.
    The Exchange now proposes to amend its fee schedule to incorporate 
additional fees related to the BZX Top or BZX Last Sale feeds.\10\ 
These fees include the following, each of which are described in detail 
below: (i) Usage Fees for both Professional \11\ and Non-Professional 
\12\ Users; \13\ (ii) Enterprise Fees; \14\ and (iii) a Digital Media 
Enterprise Fee.
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    \10\ The Exchange notes that EDGA Exchange, Inc. (``EDGA''), 
EDGX Exchange, Inc. (``EDGX'') and BATS Y-Exchange, Inc. (``BYX'', 
together with the Exchange, EDGA and EDGX, the ``BATS Exchanges'') 
also filed proposed rule changes with Commission to adopt similar 
fees for their respective Top and Last Sale market data product. See 
File Nos. SR-EDGA-2015-25, SR-EDGX-2015-28, and SR-BYX-2015-30. The 
Exchange represents that the proposed fees will not cause the 
combined cost of subscribing to each of the BATS Exchanges' 
individual Top and Last Sale feeds to be greater than those 
currently charged to subscribe to the BATS One Feed. See Securities 
Exchange Act Release Nos. 74285 (February 18, 2015), 80 FR 9828 
(February 24, 2015) (SR-BATS-2015-11); 74283 (February 18, 2015), 80 
FR 9809 (February 24, 2015) (SR-EDGA-2015-09); 74282 (February 17, 
2015), 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09); and 74284 
(February 18, 2015), 80 FR 9792 (February 24, 2015) (SR-BYX-2015-09) 
(``Initial BATS One Feed Fee Filings''). In these filings, the 
Exchange represented that the cost of subscribing to each of the 
underlying individual feeds necessary to create the BATS One Feed 
would not be greater than the cost of subscribing to the BATS One 
Feed. Id.
    \11\ A ``Professional User'' is defined as ``any User other than 
a Non-Professional User.'' See the Exchange Fee Schedule available 
at http://batstrading.com/support/fee_schedule/bzx/.
    \12\ A ``Non-Professional User'' is defined as ``a natural 
person who is not: (i) Registered or qualified in any capacity with 
the Commission, the Commodity Futures Trading Commission, any state 
securities agency, any securities exchange or association, or any 
commodities or futures contract market or association; (ii) engaged 
as an ``investment adviser'' as that term is defined in Section 
[202(a)(11)] of the Investment Advisers Act of 1940 (whether or not 
registered or qualified under that Act); or (iii) employed by a bank 
or other organization exempt from registration under federal or 
state securities laws to perform functions that would require 
registration or qualification if such functions were performed for 
an organization not so exempt.'' Id.
    \13\ The Exchange notes that User fees as well as the 
distinctions based on professional and non-professional users have 
been previously filed with or approved by the Commission by the BATS 
Exchanges and the Nasdaq Stock Market LLC (``Nasdaq''). See 
Securities Exchange Act Release No. 59582 (March 16, 2009), 74 FR 
12423 (March 24, 2009) (Order approving SR-Nasdaq-2008-102). See 
also the Initial BATS One Feed Fee Filings, supra note 11 [sic].
    \14\ The Exchange notes that Enterprise fees have been 
previously filed with or approved by the Commission by the Exchange, 
EDGA, EDGX, BYX, Nasdaq, NYSE, and the CTA/CQ Plans. See Nasdaq Rule 
7047. Securities Exchange Act Release Nos. 71507 (February 7, 2014), 
79 FR 8763 (February 13, 2014) (SR-NASDAQ-2014-011); 70211 (August 
15, 2013), 78 FR 51781 (August 21, 2013) (SR-NYSE-2013-58); and 
70010 (July 19, 2013) (File No. SR-CTA/CQ-2013-04). See also the 
Initial BATS One Feed Fee Filings, supra note 11 [sic].
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    User Fees. The Exchange proposes to charge those who receive either 
BZX Top or BZX Last Sale from External Distributors different fees for 
both their Professional Users and Non-Professional Users. The Exchange 
will assess a monthly fee for Professional Users of $4.00 per User. 
Non-Professional Users will be assessed a monthly fee of $0.10 per 
User.\15\ The Exchange does not

[[Page 41524]]

propose to charge per User fees to Internal Distributors.
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    \15\ The Exchange notes that EDGA, EDGX and BYX also filed 
proposed rule changes with Commission to adopt User fees for their 
respective Top and Last Sale market data product. See File Nos. SR-
EDGA-2015-25, SR-EDGX-2015-28 and SR-BYX-2015-30 (proposing a 
monthly fee of $2.00 per Professional User and of $0.05 per Non-
Professional User). A vendor that wishes to create a product like 
the BATS One Summary Feed could subscribe to each of the BATS 
Exchanges' Top and Last Sale feeds. See the Initial BATS One Feed 
Fee Filings, supra note 11 [sic]. Should a vendor subscribe to each 
of the BATS Exchanges' Top and Last Sale feeds, it would be charged 
a total of $10.00 per month per Professional User and $0.25 per 
month per Non-Professional User. This amount is equal to, and not 
greater than the User Fees charged for the BATS One Summary Feed. 
Id. (adopting fees of $10.00 per month per Professional User and 
$0.25 per month per Non-Professional User as well as a separate 
$1,000 per month Data Consolidation Fee for the BATS One Summary 
Feed).
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    External Distributors would be required to count every Professional 
User and Non-Professional User to which they provide BZX Top and/or BZX 
Last Sale, the requirements for which are identical to that currently 
in place for the BATS One Feed.\16\ Thus, the External Distributor's 
count will include every person and device that accesses the data 
regardless of the purpose for which the individual or device uses the 
data. External Distributors must report all Professional and Non-
Professional Users in accordance with the following:
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    \16\ See the Initial BATS One Feed Fee Filings, supra note 11 
[sic].
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     In connection with an External Distributor's distribution 
of BZX Top or BZX Last Sale, the Distributor should count as one User 
each unique User that the Distributor has entitled to have access to 
BZX Top or BZX Last Sale. However, where a device is dedicated 
specifically to a single individual, the Distributor should count only 
the individual and need not count the device.
     The External Distributor should identify and report each 
unique User. If a User uses the same unique method to gain access to 
BZX Top or BZX Last Sale, the Distributor should count that as one 
User. However, if a unique User uses multiple methods to gain access to 
BZX Top or BZX Last Sale (e.g., a single User has multiple passwords 
and user identifications), the External Distributor should report all 
of those methods as an individual User.
     External Distributors should report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
     If an External Distributor entitles one or more 
individuals to use the same device, the External Distributor should 
include only the individuals, and not the device, in the count.
    Each External Distributor will receive a credit against its monthly 
Distributor Fee for BZX Top or BZX Last Sale equal to the amount of its 
monthly Usage Fees up to a maximum of the Distributor Fee for BZX Top 
or BZX Last Sale. For example, an External Distributor will be subject 
to a $2,500 monthly Distributor Fee where they elect to receive BZX 
Top. If that External Distributor reports User quantities totaling 
$2,500 or more of monthly usage of BZX Top, it will pay no net 
Distributor Fee, whereas if that same External Distributor were to 
report User quantities totaling $1,500 of monthly usage, it will pay a 
net of $1,000 for the Distributor Fee. External Distributors will 
remain subject to the per User fees discussed above. The same would 
apply to receipt of BZX Last Sale.
    Enterprise Fee. The Exchange also proposes to establish a $15,000 
per month Enterprise Fee that will permit a recipient firm who receives 
BZX Top or BZX Last Sale from an External Distributor to receive the 
data for an unlimited number of Professional and Non-Professional 
Users.\17\ For example, if a recipient firm had 15,000 Professional 
Users who each receive BZX Top or BZX Last Sale at $4.00 per month, 
then that recipient firm will pay $60,000 per month in Professional 
Users fees. Under the proposed Enterprise Fee, the recipient firm will 
pay a flat fee of $15,000 for an unlimited number of Professional and 
Non-Professional Users for BZX Top or BZX Last Sale. A recipient firm 
must pay a separate Enterprise Fee for each External Distributor that 
controls display of BZX Top or BZX Last Sale if it wishes such User to 
be covered by an Enterprise Fee rather than by per User fees. A 
recipient firm that pays the Enterprise Fee will not have to report its 
number of such Users on a monthly basis. However, every six months, a 
recipient firm must provide the Exchange with a count of the total 
number of natural person users of each product, including both 
Professional and Non-Professional Users. Lastly, the proposed 
Enterprise Fee would be counted towards the Distributor Fee credit 
described above, under which an External Distributor receives a credit 
towards its Distributor Fee equal to the amount of its monthly BZX Top 
or BZX Last Sale usage fees.
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    \17\ The Exchange notes that EDGA, EDGX and BYX also filed 
proposed rule changes with Commission to adopt Enterprise Fees for 
their respective Top and Last Sale market data product. See File 
Nos. SR-EDGA-2015-25, SR-EDGX-2015-28 and SR-BYX-2015-30 (proposing 
a monthly Enterprise Fee of $15,000 for EDGX Top and EDGX Last Sale 
and $10,000 for EDGA Top and Last Sale as well as BYX Top and Last 
Sale). A vendor that wishes to create a product like the BATS One 
Summary Feed could subscribe to each of the BATS Exchanges' Top and 
Last Sale feeds. See the Initial BATS One Feed Fee Filings, supra 
note 11 [sic]. Should a vendor subscribe to each of the BATS 
Exchanges' Top and Last Sale feeds, it would be charged a total 
monthly Enterprise Fee of $50,000. This amount is equal to, and not 
greater than the Enterprise Fee charged for the BATS One Summary 
Feed. Id. (adopting a monthly Enterprise Fee of $50,000 as well as a 
separate $1,000 per month Data Consolidation Fee for the BATS One 
Summary Feed).
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    Digital Media Enterprise Fee. The Exchange proposes to adopt a 
Digital Media Enterprise Fee of $2,500 per month for BZX Top and BZX 
Last Sale.\18\ As an alternative to proposed User fees discussed above, 
a recipient firm may purchase a monthly Digital Media Enterprise 
license to receive BZX Top and BZX Last Sale from an External 
Distributor to distribute to an unlimited number of Professional and 
Non-Professional Users for viewing via television, Web sites, and 
mobile devices for informational and non-trading purposes only without 
having to account for the extent of access to the data or the report 
the number of Users to the Exchange. Lastly, the proposed Digital Media 
Enterprise Fee would be counted towards the Distributor Fee credit 
described above, under which an External Distributor receives a credit 
towards its Distributor Fee equal to the amount of its monthly BZX Top 
and/or BZX Last Sale usage fees.
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    \18\ The Exchange notes that EDGA, EDGX and BYX also filed 
proposed rule changes with Commission to adopt a Digital Media 
Enterprise Fee for their respective Top and Last Sale market data 
product. See File Nos. SR-EDGA-2015-25, SR-EDGX-2015-28 and SR-BYX-
2015-30 (proposing a monthly Digital Media Enterprise Fee of $2,500 
for their respective Top and Last Sale feeds). A vendor that wishes 
to create a product like the BATS One Summary Feed could subscribe 
to each of the BATS Exchanges' Top and Last Sale feeds. See the 
Initial BATS One Feed Fee Filings, supra note 11 [sic]. Should a 
vendor subscribe to each of the BATS Exchanges' Top and Last Sale 
feeds, it would be charged a total monthly Digital Media Enterprise 
Fee of $10,000. This amount is less than the Digital Media 
Enterprise Fee charged for the BATS One Summary Feed. See Securities 
Exchange Act Release Nos. 74598 (March 27, 2015), 80 FR 17791 (April 
2, 2015) (SR-BATS-2015-24); 74599 (March 27, 2015), 80 FR 17812 
(April 2, 2015) (SR-BYX-2015-19); 74600 (March 27, 2014), 80 FR 
17797 (April 2, 2015) (SR-EDGA-2015-14); and 74601 (March 27, 2015), 
80 FR 17804 (April 2, 2015) (SR-EDGX-2015-14) (adopting a monthly 
Digital Media Enterprise Fee of $15,000 for the BATS One Summary 
Feed).
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Non-Substantive, Corrective Changes
    The Exchange proposes to make a non-substantive change to the 
description of the BATS One Feed Enterprise Fee as well as correct a 
cross-reference within the definition of ``Non-Professional User''.
    First, the proposed change to the description of the BATS One Feed 
\19\

[[Page 41525]]

Enterprise Fee is intended to align with the descriptions of the 
Enterprise Fees for BZX Top and BZX Last Sale proposed above. The fee 
schedule currently states that:
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    \19\ In sum, the BATS One Feed is a data feed that disseminates, 
on a real-time basis, the aggregate best bid and offer (``BBO'') of 
all displayed orders for securities traded on BZX and its affiliated 
exchanges and for which the BATS Exchanges report quotes under the 
Consolidated Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan. 
The BATS One Feed also contains the individual last sale information 
for the BATS Exchanges (collectively with the aggregate BBO, the 
``BATS One Summary Feed''). In addition, the BATS One Feed contains 
optional functionality which enables recipients to receive 
aggregated two-sided quotations from the BATS Exchanges for up to 
five (5) price levels (``BATS One Premium Feed''). See Securities 
Exchange Act Release No. 73918 (December 23, 2014), 79 FR 78920 
(December 31, 2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-
BATS-2014-055; SR-BYX-2014-030) (Notice of Amendments No. 2 and 
Order Granting Accelerated Approval to Proposed Rule Changes, as 
Modified by Amendments Nos. 1 and 2, to Establish a New Market Data 
Product called the BATS One Feed) (``BATS One Approval Order'').

[a]s an alternative to User fees, a recipient firm may purchase a 
monthly Enterprise license to receive the BATS One Feed from an 
External Distributor to an unlimited number of Professional and Non-
Professional Users. A recipient firm must pay a separate Enterprise 
Fee for each External Distributor that controls the display of the 
BATS One Feed if it wishes such User to be covered by the Enterprise 
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Fee. The Enterprise Fee is in addition to the Distributor Fee.

The Exchange proposes to delete the last sentence of the above 
description stating that the Enterprise Fee is in addition to the 
Distributor Fee. The original purpose of this sentence was to clarify 
that the Distributor Fee and Enterprise Fee were separate fees. 
However, the Exchange understands that this sentence has led to 
confusion for the following reason. As is the case for the proposed 
Enterprise Fees for BZX Top and BZX Last Sale described above, the BATS 
One Feed Enterprise Fee is counted towards the Distributor Fee credit, 
under which an External Distributor receives a credit towards its 
Distributor Fee equal to the amount of its monthly BATS One Feed Usage 
Fees. Stating that the Enterprise and Distributor fees were separate 
fees has caused confusion regarding the application of the Distributor 
Fee Usage Fee credit. Therefore, the Exchange proposes to delete the 
last sentence stating that the Enterprise Fee is in addition to the 
Distributor Fee. Deleting this sentence does not alter the manner in 
which the Enterprise Fee is charged. Rather, it is intended to avoid 
confusion and align the description with that of the proposed 
Enterprise Fees for BZX Top and BZX Last Sale described above.
    Second, the Exchange proposes to correct a cross-reference within 
the definition of ``Non-Professional User''. In part, a ``Non-
Professional User'' is currently defined as ``a natural person who is 
not: . . . engaged as an ``investment adviser'' as that term is defined 
in Section 201(11) of the Investment Advisers Act of 1940 (whether or 
not registered or qualified under that Act) . . .'' The definition 
incorrectly states that the term ``investment adviser is defined under 
Section 201(11) of the Investment Advisers Act of 1940, when it is, in 
fact, defined under Section 202(a)(11) of the Investment Advisers Act 
of 1940. Therefore, the Exchange proposes to replace the reference to 
Section 201(11) with Section 202(a)(11) within the definition of Non-
Professional User.
Implementation Date
    The Exchange proposes to implement the proposed changes to its fee 
schedule on July 1, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\20\ in general, and 
furthers the objectives of Section 6(b)(4),\21\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data. The Exchange believes that the proposed rates are 
equitable and non-discriminatory in that they apply uniformly to all 
recipients of Exchange data. The Exchange believes the proposed fees 
are competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to recipients. Lastly, the Exchange 
also believes that the proposed fees are reasonable and non-
discriminatory because they will apply uniformly to all recipients of 
Exchange data.
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    \20\ 15 U.S.C. 78f.
    \21\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \22\ in that it supports (i) 
fair competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\23\ which provides that any national securities 
exchange that distributes information with respect to quotations for or 
transactions in an NMS stock do so on terms that are not unreasonably 
discriminatory. In adopting Regulation NMS, the Commission granted 
self-regulatory organizations and broker-dealers increased authority 
and flexibility to offer new and unique market data to the public. It 
was believed that this authority would expand the amount of data 
available to consumers, and also spur innovation and competition for 
the provision of market data.
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    \22\ 15 U.S.C. 78k-1.
    \23\ See 17 CFR 242.603.
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    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors will be subject to the proposed fees on an equivalent basis. 
BZX Last Sale and BZX Top are distributed and purchased on a voluntary 
basis, in that neither the Exchange nor market data distributors are 
required by any rule or regulation to make this data available. 
Accordingly, Distributors and Users can discontinue use at any time and 
for any reason, including due to an assessment of the reasonableness of 
fees charged. Firms have a wide variety of alternative market data 
products from which to choose, such as similar proprietary data 
products offered by other exchanges and consolidated data. Moreover, 
the Exchange is not required to make any proprietary data products 
available or to offer any specific pricing alternatives to any 
customers.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
BZX Top and BZX Last Sale further ensures that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar market data products. If another exchange (or its 
affiliate) were to charge less to consolidate and distribute its 
similar product than the Exchange charges to consolidate and distribute 
BZX Top or BZX Last Sale, prospective Users likely would not subscribe 
to, or would cease subscribing to, the BZX Top or BZX Last Sale.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or rate-making approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would

[[Page 41526]]

be so complicated that it could not be done practically.\24\
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    \24\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities 
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Establish an 
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative 
December 1, 2014).
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    User Fees. The Exchange believes that implementing the Professional 
and Non-Professional User fees for BZX Top and BZX Last Sale is 
equitable and reasonable because it will result in greater availability 
to Professional and Non-Professional Users. Moreover, introducing a 
modest Non-Professional User fee for BZX Top and BZX Last Sale is 
reasonable because it provides an additional method for retail 
investors to access BZX Top and BZX Last Sale data by providing the 
same data that is available to Professional Users. The Exchange 
believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to recipient 
firms and Users. The fee structure of differentiated Professional and 
Non-Professional fees is utilized by the Exchange for the BATS One Feed 
and has long been used by other exchanges for their proprietary data 
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to 
reduce the price of data to retail investors and make it more broadly 
available.\25\ Offering BZX Top and BZX Last Sale to Non-Professional 
Users with the same data available to Professional Users results in 
greater equity among data recipients.
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    \25\ See the Initial BATS One Feed Fee Filings, supra note 11 
[sic]. See also, e.g., Securities Exchange Act Release No. 20002, 
File No. S7-433 (July 22, 1983) (establishing nonprofessional fees 
for CTA data); Nasdaq Rules 7023(b), 7047.
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    In addition, the proposed fees are reasonable when compared to 
similar fees for comparable products offered by the NYSE. Specifically, 
NYSE offers NYSE BBO, which includes best bid and offer for NYSE traded 
securities, for a monthly fee of $4.00 per professional subscriber and 
$0.20 per non-professional subscriber.\26\ NYSE also offers NYSE 
Trades, which is a data feed that provides the last sale information 
for NYSE traded securities, for the same price as NYSE BBO. The 
Exchange's proposed per User Fees for BZX Top and BZX Last Sale are 
comparable with the NYSE's fees for NYSE Trades and NYSE BBO.
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    \26\ See NYSE Market Data Pricing dated May 2015 available at 
http://www.nyxdata.com/.
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    Enterprise Fee. The proposed Enterprise Fee for BZX Top and BZX 
Last Sale are equitable and reasonable as the fees proposed are less 
than the enterprise fees currently charged for NYSE Trades and NYSE 
BBO. The NYSE charges a separate enterprise fee of $190,000 per month 
for NYSE Trades and NYSE BBO.\27\ In addition, the Enterprise Fee 
proposed by the Exchange could result in a fee reduction for recipient 
firms with a large number of Professional and Non-Professional Users. 
If a recipient firm has a smaller number of Professional Users of BZX 
Top or BZX Last Sale, then it may continue using the per User structure 
and benefit from the per User Fee reductions. By reducing prices for 
recipient firms with a large number of Professional and Non-
Professional Users, the Exchange believes that more firms may choose to 
receive and to distribute the BZX Top or BZX Last Sale, thereby 
expanding the distribution of this market data for the benefit of 
investors.
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    \27\ Id.
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    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count natural person users every six months, which is 
a significant reduction in administrative burden. Finally, the Exchange 
believes that it is equitable and not unfairly discriminatory to 
establish an Enterprise Fee because it reduces the Exchange's costs and 
the Distributor's administrative burdens in tracking and auditing large 
numbers of Users.
    Digital Media Enterprise Fee. The Exchange believes that the 
proposed Digital Media Enterprise Fee for BZX Top and BZX Last Sale 
provides for an equitable allocation of reasonable fees among 
recipients of the data and is not designed to permit unfair 
discrimination among customers, brokers, or dealers. In establishing 
the Digital Media Enterprise Fee, the Exchange recognizes that there is 
demand for a more seamless and easier-to-administer data distribution 
model that takes into account the expanded variety of media and 
communication devices that investors utilize today. The Exchange 
believes the Digital Media Enterprise Fee will be easy to administer 
because data recipients that purchase it would not be required to 
differentiate between Professional and Non-Professional Users, account 
for the extent of access to the data, or report the number of Users. 
This is a significant reduction on a recipient firm's administrative 
burdens and is a significant value to investors. For example, a 
television broadcaster could display BZX Top and/or BZX Last Sale data 
during market-related programming and on its Web site or allow viewers 
to view the data via their mobile devices, creating a more seamless 
distribution model that will allow investors more choice in how they 
receive and view market data, all without having to account for and/or 
measure who accesses the data and how often they do so.
    The proposed Digital Media Enterprise Fee is equitable and 
reasonable because it will also enable recipient firms to more widely 
distribute data from BZX Top and BZX Last Sale to investors for 
informational purposes at a lower cost than is available today. For 
example, a recipient firm may purchase an Enterprise license in the 
amount of $15,000 per month for to receive BZX Top and/or BZX Last Sale 
from an External Distributor for an unlimited number of Professional 
and Non-Professional Users, which is greater than the proposed Digital 
Media Enterprise Fee. The Exchange also believes the amount of the 
Digital Media Enterprise Fee is reasonable as compared to the existing 
enterprise fees discussed above because the distribution of BZX Top and 
BZX Last Sale data is limited to television, Web sites, and mobile 
devices for informational purposes only, while distribution of BZX Top 
and BZX Last Sale data pursuant to an Enterprise license contains no 
such limitation. The Exchange also believes that the proposed Digital 
Media Enterprise Fee

[[Page 41527]]

is equitable and reasonable because it is less than similar fees 
charged by other exchanges.\28\
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    \28\ The Nasdaq Stock Market offers proprietary data products 
for distribution over the internet and television under alternative 
fee schedules that are subject to maximum fee of $50,000 per month. 
See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise 
fee of $40,000 per month for the NYSE Trade Digital Media product. 
See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR 
20983 (April 8, 2013) (SR-NYSE-2013-23).
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    Non-Substantive, Corrective Changes. The Exchange believes that the 
proposed non-substantive, corrective changes are consistent with 
Section 6(b) of the Act,\29\ in general, and Section 6(b)(4) of the 
Act,\30\ in particular, in that they provide for an equitable 
allocation of reasonable fees among recipients of the data and is not 
designed to permit unfair discrimination among customers, brokers, or 
dealers. These proposed changes are equitable and reasonable because 
the changes are designed to clarify the fee schedule and avoid 
potential investor confusion. The amendment to the BATS One Enterprise 
Fee is also intended to align the description with that of the proposed 
Enterprise Fees for BZX Top and BZX Last Sale described above. The 
proposed changes are also non-discriminatory as they would apply to all 
recipient firms uniformly.
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    \29\ 15 U.S.C. 78f.
    \30\ 15 U.S.C. 78f(b)(4).
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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.
BZX Top and BZX Last Sale
    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. The 
Exchange's ability to price BZX Last Sale and BZX Top are constrained 
by: (i) Competition among exchanges, other trading platforms, and Trade 
Reporting Facilities (``TRF'') that compete with each other in a 
variety of dimensions; (ii) the existence of inexpensive real-time 
consolidated data and market-specific data and free delayed data; and 
(iii) the inherent contestability of the market for proprietary data.
    The Exchange and its market data products are subject to 
significant competitive forces and the proposed fees represent 
responses to that competition. To start, the Exchange competes 
intensely for order flow. It competes with the other national 
securities exchanges that currently trade equities, with electronic 
communication networks, with quotes posted in FINRA's Alternative 
Display Facility, with alternative trading systems, and with securities 
firms that primarily trade as principal with their customer order flow.
    In addition, BZX Last Sale and BZX Top compete with a number of 
alternative products. For instance, BZX Last Sale and BZX Top do not 
provide a complete picture of all trading activity in a security. 
Rather, the other national securities exchanges, the several TRFs of 
FINRA, and Electronic Communication Networks (``ECN'') that produce 
proprietary data all produce trades and trade reports. Each is 
currently permitted to produce last sale information products, and many 
currently do, including Nasdaq and NYSE. In addition, market 
participants can gain access to BZX last sale prices and top-of-book 
quotations, though integrated with the prices of other markets, on 
feeds made available through the SIPs.
    In sum, the availability of a variety of alternative sources of 
information imposes significant competitive pressures on Exchange data 
products and the Exchange's compelling need to attract order flow 
imposes significant competitive pressure on the Exchange to act 
equitably, fairly, and reasonably in setting the proposed data product 
fees. The proposed data product fees are, in part, responses to that 
pressure. The Exchange believes that the proposed fees would reflect an 
equitable allocation of its overall costs to users of its facilities.
    In addition, when establishing the proposed fees, the Exchange 
considered the competitiveness of the market for proprietary data and 
all of the implications of that competition. The Exchange believes that 
it has considered all relevant factors and has not considered 
irrelevant factors in order to establish fair, reasonable, and not 
unreasonably discriminatory fees and an equitable allocation of fees 
among all Users. The existence of alternatives to BZX Last Sale and BZX 
Top, including existing similar feeds by other exchanges, consolidated 
data, and proprietary data from other sources, ensures that the 
Exchange cannot set unreasonable fees, or fees that are unreasonably 
discriminatory, when vendors and subscribers can elect these 
alternatives or choose not to purchase a specific proprietary data 
product if its cost to purchase is not justified by the returns any 
particular vendor or subscriber would achieve through the purchase.
Non-Substantive, Corrective Changes
    The proposed non-substantive, corrective changes to the fee 
schedule will not have any impact on completion. The proposed changes 
are designed to clarify the fee schedule and avoid potential investor 
confusion.

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 \31\ and paragraph (f) of Rule 19b-4 
thereunder.\32\ 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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    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 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-2015-48 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-2015-48. 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

[[Page 41528]]

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-2015-48, and should be 
submitted on or before August 5, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-17294 Filed 7-14-15; 8:45 am]
BILLING CODE 8011-01-P