[Federal Register Volume 81, Number 94 (Monday, May 16, 2016)]
[Notices]
[Pages 30373-30375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11408]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77797; File No. SR-BatsBZX-2016-13]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.13, Order Execution and Routing, To Delete References to the TRIM3 
Routing Option

May 10, 2016.
    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 May 2, 2016, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') 
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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    \14\ 17 CFR 200.30-3(a)(12).
    \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 references to the TRIM3 routing option. The 
Exchange also proposes to amend its fee schedule to delete references 
to the TRIM3 routing option under fee codes BY and TV.
    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.

[[Page 30374]]

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 references to the TRIM3 routing option. The Exchange 
also proposes to amend its fee schedule to delete references to the 
TRIM3 routing option under fee codes BY and TV.
    Exchange Rule 11.13(b)(3)(G) includes the TRIM3 routing option as 
one of the routing options under which an order checks the System \5\ 
for available shares if so instructed by the entering User \6\ and then 
is sent to destinations on the applicable System routing table. 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.\7\ Orders routed pursuant 
to the TRIM3 routing option are only sent to NASDAQ BX, BYX Exchange, 
Inc. (``BYX''), and certain alternative trading systems available 
through the Exchange's DRT routing option (``DRT Venues'').\8\
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    \5\ 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).
    \6\ 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).
    \7\ See Exchange Rule 11.13(b)(3). The Exchange reserves the 
right to maintain a different System routing table for different 
routing options and to modify the System routing table at any time 
without notice. Id.
    \8\ DRT is a routing option in which the entering firm instructs 
the System to route to alternative trading systems included in the 
System routing table. Unless otherwise specified, DRT can be 
combined with and function consistent with all other routing 
options. See Exchange Rule 11.13(b)(3)(D). See also Securities 
Exchange Act Release No. 66324 (February 6, 2012), 77 FR 7642 
(February 13, 2012) (SR-BATS-2012-007) (adopting the TRIM3 routing 
option).
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    Fee code BY is yielded on orders routed to BYX using Destination 
Specific, TRIM, TRIM2, TRIM3 or SLIM routing strategy. Orders that 
yield fee code BY receive a rebate of $0.0015 per share. Fee Code TV is 
yielded on orders routed to NASDAQ BX LLC using TRIM, TRIM2 or TRIM3 
routing strategy. Orders that yield fee code TV receive a rebate of 
$0.0010 per share.
    Because few Users elect the TRIM3 routing option, the Exchange has 
determined that the current demand does not warrant the infrastructure 
and ongoing maintenance expenses required to support the product. 
Therefore, the Exchange proposes to delete reference to the TRIM3 
routing option under Rule 11.13(b)(3)(G). The Exchange also proposes to 
amend its fee schedule to delete references to the TRIM3 routing option 
under fee codes BY and TV. Users seeking to route to BYX, NASDAQ BX, or 
DRT venues may use alternative methods, such as connecting to those 
exchanges 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.\9\
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    \9\ See e.g., Rule 11.13(b)(3)(E) (describing the Destination 
Specific routing option under which an order checks the System for 
available shares and then is sent to an away trading center or 
centers specified by the User).
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    In connection with the deletion of the TRIM3 routing option, the 
Exchange also proposes to amend Rule 11.13(b)(3)(G) to update a 
numerical reference to the SLIM routing option. Exchange Rule 
11.13(b)(3)(G) currently states that in connection with SLIM routing 
option, currently listed as subsection (vii) of the Rule, a User may 
designate that an order first routes to BYX, checks the System for 
available shares, and then routes to other destinations on the System 
routing table. Upon deletion of the TRIM3 routing option, the SLIM 
routing option will be renumbered as section (vi) and the Exchange 
proposes to update Rule 11.13(b)(3)(G) accordingly.
    The Exchange intends to implement the proposed rule change on May 
6, 2016.\10\
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    \10\ 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 \11\ in general, and furthers the objectives of section 
6(b)(5) of the Act \12\ in particular, in that it is designed to 
promote just and equitable principles of 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 TRIM3 
routing option will no longer be available to all Users. The Exchange 
has few Users electing the TRIM3 routing option and has determined that 
the current demand does not warrant the infrastructure and ongoing 
maintenance expense required to support the product. 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 to BYX, NASDAQ BX, or DRT venues.\13\ In addition, the 
TRIM3 routing option is not core product offering by the Exchange, nor 
is the Exchange required by the Act to offer such product. Therefore, 
the Exchange believes the proposed rule change would make its rules 
clearer and less confusing for investors by removing a routing option 
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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    \13\ See supra note 9 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 TRIM3 routing option that is 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.

[[Page 30375]]

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\14\ and Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ 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 No. SR-BatsBZX-2016-13 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-BatsBZX-2016-13. 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-BatsBZX-2016-13, and should be 
submitted on or before June 6, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Robert W. Errett,
Deputy Secretary.
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    \19\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-11408 Filed 5-13-16; 8:45 am]
 BILLING CODE 8011-01-P