[Federal Register Volume 80, Number 247 (Thursday, December 24, 2015)]
[Notices]
[Pages 80428-80430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32384]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76688; File No. SR-BATS-2015-114]


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

December 18, 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 December 15, 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 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 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) (``Fee Schedule'') to adopt fees for the recently 
adopted ALLB routing strategy. The Exchange also proposes to amend the 
Fee Codes and Associated Fees table of the Fee Schedule to indicate the 
amount of the fees and rebates as five decimal points, rather than four 
decimal points, by adding a zero to the end of each fee and rebate.
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange. A 
Member will have the status of a ``member'' of the Exchange as that 
term is defined in Section 3(a)(3) of the Act.'' 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 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.

[[Page 80429]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
ALLB Routing Fees
    The Exchange proposes to adopt fees for the ALLB routing strategy. 
In sum, ALLB is a routing option under which the order checks the 
System \6\ for available shares and is then sent to the BATS Y-
Exchange, Inc. (``BYX''), EDGA Exchange, Inc. (``EDGA''), and the EDGX 
Exchange, Inc. (``EDGX'' collectively with the Exchange, BYX, and EDGA, 
the ``BGM Affiliated Exchanges'').\7\ Specifically, an order subject to 
the ALLB routing option would execute first against liquidity on the 
BATS Book.\8\ Any remainder would then be routed to BYX, EDGA, and/or 
EDGX in accordance with the System routing table.\9\
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    \6\ The term ``System'' is defined as ``the electronic 
communications and trading facility designated by the Board through 
which securities orders of Users are consolidated for ranking, 
execution and, when applicable, routing away.'' See Exchange Rule 
1.5(aa).
    \7\ See Exchange Rule 11.13(b)(3)(O). See also Securities 
Exchange Act Release No. 76455 (November 17, 2015), 80 FR 73009 
(November 23, 2015) (SR-BATS-2015-97).
    \8\ The term ``BATS Book'' is defined as ``the System's 
electronic file of orders.'' See Exchange Rule 1.5(e).
    \9\ The term ``System routing table'' refers to the proprietary 
process for determining the specific trading venues to which the 
System routes orders and the order in which it routes them. See 
Exchange Rule 11.13(b)(3).
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    The Exchange now proposes to adopt three new fee codes, AA, AX, and 
AY and related fees for the ALLB routing strategy. These fee codes 
would enable the Exchange to pass through the rate that BATS Trading, 
Inc. (``BATS Trading''), the Exchange's affiliated routing broker-
dealer, would be charged for routing orders to BYX, EDGA, and EDGX.\10\ 
Each of the proposed fee codes are described as follows:
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    \10\ Orders using the ALLB routing option that execute on the 
Exchange would be subject to the Exchange's standard fees and 
rebates, unless the Member achieves a volume tiered reduced fee or 
enhanced rebate.
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     Fee Code AA. Order routed to EDGA using the ALLB routing 
strategy would yield fee code AA and receive a rebate of $0.00200 per 
share in securities priced at or above $1.00. Under proposed footnote 
15, orders yielding fee code AA in securities priced below $1.00 would 
be charged no fee nor would they receive a rebate.
     Fee Code AX. Order routed to EDGX using the ALLB routing 
strategy would yield fee code AY and be charged a fee of $0.00290 per 
share in securities priced at or above $1.00. Under proposed footnote 
16, orders yielding fee code AX in securities priced below $1.00 would 
be charged a fee of 0.30% of the transaction's dollar value.
     Fee Code AY. Order routed to BYX using the ALLB routing 
strategy would yield fee code AY and receive a rebate of $0.00150 per 
share in securities priced at or above $1.00. Under proposed footnote 
17, orders yielding fee code AY in securities priced below $1.00 would 
be charged a fee of 0.10% of the transaction's dollar value.
    BATS Trading will pass through the above rates to the Exchange and 
the Exchange, in turn, will pass through that exact rate to its 
Members. The proposed rates would enable the Exchange to equitably 
allocate its costs among all Members utilizing the ALLB routing 
strategy.
Fee Codes and Associated Fees Table
    The Exchange also proposes to amend the Fee Codes and Associated 
Fees table to indicate the amount of the fees and rebates as five 
decimal points, rather than four decimal points, by adding a zero to 
the end of each fee and rebate, to reflect the order pricing format on 
the Exchange's Web site.\11\ The Exchange notes that none of these 
changes amend any fee or rebate, nor do they alter the manner in which 
it assesses fees or calculates rebates.
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    \11\ The Exchange notes that fee code D already indicates its 
related fee as five decimal points.
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Implementation Date
    The Exchange proposes to implement this amendment to its Fee 
Schedule on January 4, 2016, but the proposed fee codes and their 
associated rates will not be available until January 8, 2016, the date 
upon which it announced to Members that it would implement the ALLB 
routing strategy.\12\
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    \12\ See BATS Announces ALLB Routing Option, available at http://cdn.batstrading.com/resources/release_notes/2015/BATS-ALL-BATS-Routing-Strategy-Release-Schedule-Updated.pdf. The Exchange notes 
that the Fee Schedule's date was amended to January 4, 2016 in file 
no. SR-BATS-2015-115 (December 8, 2015).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange believes that its proposed rates represent an 
equitable allocation of reasonable dues, fees, and other charges among 
Members and other persons using its facilities because the Exchange 
does not levy additional fees or offer additional rebates for orders 
that it routes to BYX, EDGA, and EDGX through BATS Trading. The 
Exchange believes that its proposed pass through rate for orders that 
yield fee codes AA, AX or AY is equitable and reasonable because it 
accounts for the rate that BATS Trading would be subject to for orders 
it routes and are executed on BYX, EDGA, and EDGX. In addition, the 
proposal allows the Exchange to pass-through to its Members the rate 
for orders that are routed to BYX, EDGA, and EDGX using the ALLB 
routing strategy. Furthermore, the Exchange notes that routing through 
BATS Trading is voluntary. Lastly, the Exchange also believes that the 
proposed amendment is non-discriminatory because it applies uniformly 
to all Members.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the changes to the Fee Codes and 
Associated Fees table of the Fee Schedule are reasonable because they 
are designed to provide greater transparency to Members with regard to 
how the Exchange assesses fees and calculates rebates. The Exchange 
notes that none of the proposed changes are designed to amend any fee, 
nor alter the manner in which it assesses fees or calculates rebates. 
These changes to the Fee Schedule are intended to make the Fee Schedule 
clearer and less confusing for investors and 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

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that this change represents a 
significant departure from previous pricing offered by the Exchange or 
pricing offered by the Exchange's competitors. Additionally, Members 
may opt to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value. Accordingly, the Exchange does 
not believe that the proposed changes will impair the ability of 
Members or competing venues to maintain their competitive standing in 
the financial markets. The Exchange believes that its proposal to pass 
through the rates that BATS Trading

[[Page 80430]]

would be subject to for orders routing to BYX, EDGA, and EDGX using the 
ALLB routing strategy to Members would increase intermarket competition 
because it offers customers an alternative means to route orders to 
those venues. In addition, the proposed pricing would not provide any 
advantage to Users when routing to BYX, EDGA, and EDGX as compared to 
other methods of routing or connectivity available to Users by the 
Exchange because the proposed rates are identical to what the Member 
would be subject to if it routed to those venues directly. The Exchange 
believes that its proposal would not burden intramarket competition 
because the proposed rate would apply uniformly to all Members.
    The Exchange believes that the changes to the Fee Codes and 
Associated Fees table of the Fee Schedule would not affect intermarket 
nor intramarket competition because none of these changes are designed 
to amend any fee or alter the manner in which the Exchange assesses 
fees or calculates rebates. These changes are intended to provide 
greater clarity to Members with regard to how the Exchange access fees 
and calculates rebates.

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

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BATS-2015-114 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 No. SR-BATS-2015-114. 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 will also 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 No. SR-BATS-2015-114 and should be 
submitted on or before January 14, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-32384 Filed 12-23-15; 8:45 am]
 BILLING CODE 8011-01-P