[Federal Register Volume 81, Number 94 (Monday, May 16, 2016)]
[Notices]
[Pages 30360-30362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11401]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77790; File No. SR-BatsBYX-2016-06]


Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 11.13, Order Execution and Routing, To Delete the IOCM and ICMT 
Routing Options

May 10, 2016.
    Pursuant to the provisions of 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 May 2, 2016, Bats BYX Exchange, Inc. (the 
``Exchange'' or ``BYX'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Exchange has designated this proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it 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).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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 Rule 11.13, Order Execution 
and Routing, to delete the IOCM and ICMT routing options. The Exchange 
also proposes to amend its fee schedule to delete: (i) References to 
the IOCM and ICMT routing options under footnote 8; and (ii) fee code 
PX, which is yielded on orders routed using the RMPT routing option or 
routed to Bats EDGX Exchange, Inc. (``EDGX'') to execute against 
MidPoint Peg Orders \5\ on EDGX using ICMT or IOCM routing options.
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    \5\ See EDGX Rule 11.8(d). The BYX fee schedule uses the term 
``EDGX MPM'' for fee code PX. EDGX MPM is intended to refer to 
contra side MidPoint Peg Orders on EDGX.
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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.

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

1. Purpose
    The Exchange proposes to amend Rule 11.13, Order Execution and 
Routing, to delete the IOCM and ICMT routing options. The Exchange also 
proposes to amend its fee schedule to delete: (i) References to the 
IOCM and ICMT routing options under footnote 8; and (ii) fee code PX, 
which is yielded on orders routed using the RMPT routing option or 
routed to EDGX to execute against MidPoint Peg Orders on EDGX using 
ICMT or IOCM routing options.
    Under Rule 11.13(b)(3)(O), an order utilizing the IOCM routing 
option checks the System \6\ for available shares and then is sent, as 
MidPoint Peg Order with a Time-in-Force of IOC, to EDGX. Under Rule 
11.13(b)(3)(P), an order utilizing the ICMT routing option checks the 
System for available shares, then is sent to destinations on the System 
routing table and then is sent, as MidPoint Peg Order with a Time-in-
Force of IOC, to EDGX. If shares remain unexecuted after routing 
pursuant to both the IOCM and ICMT routing options, they are posted on 
the book, unless otherwise instructed by the User.\7\
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    \6\ The ``System'' is the Exchange's 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\ The term ``User'' is defined as ``any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(cc).
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    Footnote 8 of the fee schedule states that orders in securities 
priced below $1.00 that remove liquidity utilizing certain routing 
strategies, including IOCM and ICMT are charged a fee of $0.29% of the 
trade's total dollar value. Fee code PX is yielded on orders routed 
using the RMPT routing option or routed to EDGX to execute against 
MidPoint Peg Orders on EDGX using ICMT or IOCM routing options. Orders 
that yield fee code PX pay a fee of $0.0012 per share in securities 
priced at or above $1.00 and 0.29% of the trade's dollar value for 
securities priced below $1.00.
    Because few Users elect the IOCM or ICMT routing options, the 
Exchange has determined that the current demand does not warrant the 
infrastructure and ongoing maintenance expenses required to support the 
products. Therefore, the Exchange proposes to delete the IOCM and ICMT 
routing options under Rule 11.13(b)(3)(O) and (P) as well as a 
reference to the IOCM and ICMT routing options under Rule 
11.13(b)(3)(H). The Exchange also proposes to amend its fee schedule to 
delete: (i) References to the IOCM and ICMT routing options under 
footnote 8; and (ii) fee code PX, which is yielded on orders routed 
using the RMPT routing option or routed to EDGX to execute against 
MidPoint Peg Orders on EDGX using ICMT or IOCM routing options. Users 
seeking to route midpoint eligible orders to EDGX may use alternative 
methods, such as connecting to EDGX directly or through a third party 
service provider, or electing another routing option offered by the 
Exchange that enables a User to post an order to certain primary 
listing markets.\8\
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    \8\ See e.g., Rule 11.13(b)(3)(Q) (describing the RMPT routing 
option under which a Mid-Point Peg Order checks the System for 
available shares and any remaining shares are then sent to 
destinations on the System routing table that support midpoint 
eligible orders. If any shares remain unexecuted after routing, they 
are posted on the BYX book as a MidPoint Peg Order, unless otherwise 
instructed by the User).
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    The Exchange intends to implement the proposed rule change on May 
5, 2016.\9\
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    \9\ See Bats to Decommission ICMT, IOCM, and TRIM3 Routing 
Strategies, issued April 18, 2016, available at http://cdn.batstrading.com/resources/release_notes/2016/Bats-to-Decommission-ICMT-IOCM-and-TRIM3-Routing-Strategies.pdf.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
promote just and equitable principles of

[[Page 30361]]

trade, to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange does not believe that this proposal will permit unfair 
discrimination among customers, brokers, or dealers because the IOCM 
and ICMT routing options will no longer be available to all Users. The 
Exchange has few Users electing the IOCM and ICMT routing options and 
has determined that the current demand does not warrant the 
infrastructure and ongoing maintenance expense required to support the 
products. Routing through the Exchange is voluntary and alternative 
routing options offered by the Exchange as well as other methods remain 
available to Users that wish to route midpoint eligible orders to 
EDGX.\12\ In addition, the IOCM and ICMT routing options are not core 
product offerings by the Exchange, nor is the Exchange required by the 
Act to offer such products. Therefore, the Exchange believes the 
proposed rule change would make its rules clearer and less confusing 
for investors by removing routing options that will no longer be 
offered by the Exchange; 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.
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    \12\ See supra note 8 and accompanying text.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. The proposed rule change is not designed to 
address any competitive issues but rather avoid investor confusion by 
eliminating the IOCM and ICMT routing options that are to be 
discontinued by the Exchange.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
states that waiver of the 30-day operative delay would allow the 
Exchange to modify its rules in a timely manner by: (i) Eliminating a 
rule that accounts for services with few subscribers that the Exchange 
intends to discontinue; and (ii) accurately describing the alternative 
routing options available to Users, thereby avoiding potential investor 
confusion during the operative delay period. Based on the foregoing, 
the Commission believes the waiver of the operative delay is consistent 
with the protection of investors and the public interest. Therefore, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BatsBYX-2016-06 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-BatsBYX-2016-06. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBYX-2016-06, and should be 
submitted on or before June 6, 2016.


[[Page 30362]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-11401 Filed 5-13-16; 8:45 am]
 BILLING CODE 8011-01-P