[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)]
[Notices]
[Pages 41617-41619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15076]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78112; File No. SR-BatsEDGX-2016-23]


Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change Related 
to Fees

June 21, 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 June 8, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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)

[[Page 41618]]

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 EDGX Rules 
15.1(a) and (c) (``Fee Schedule'') to add fee codes NA and NB.
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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.'' 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.

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

1. Purpose
    The Exchange previously filed a proposed rule change with the 
Commission to include a Non-Displayed \6\ instruction on orders routed 
to an away Trading Center.\7\ The Exchange intends to implement this 
functionality on June 1, 2016.\8\ Because other Trading Centers 
typically provide different rebates or fees with respect to non-
displayed liquidity the Exchange proposes to amend its Fee Schedule to 
add fee codes NA and NB, which would apply to orders routed with a Non-
Displayed instruction. Proposed fee code NA would be applied to orders 
that include a Non-Displayed instruction that are routed to and add 
liquidity on Bats BZX Exchange, Inc. (``BZX''), the New York Stock 
Exchange, Inc. (``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), NYSE MKT 
LLC (``NYSE MKT''), or the Nasdaq Stock Market LLC (``Nasdaq'').\9\ 
Orders that yield fee code NA would not be charged a fee nor receive a 
rebate in both securities priced at or above $1.00 or below $1.00. 
Proposed fee code NB would be applied to orders that include a Non-
Displayed instruction and are routed to and add liquidity on any 
exchange not listed in proposed fee code NA. Orders that yield fee code 
NB would be charged a fee of $0.0030 per share in securities priced at 
or above $1.00 and 0.30% of the trade's total dollar value in 
securities priced below $1.00.
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    \6\ See Exchange Rule 11.6(e)(2).
    \7\ The Exchange notes that the Exchange also amended its rules 
to route orders with a Reserve Quantity (as defined in Rule 11.6(m)) 
as such to other Trading Centers. See Securities Exchange Act 77189 
(February 19, 2016), 81 FR 9571 (February 25, 2016) (SR-EDGX-2016-
08). Orders to be routed with a Non-Displayed instruction or a 
Reserve Quantity would be handled in accordance with the rules of 
the Trading Center to which they are routed. Id. This proposal does 
not impact orders routed with a Reserve Quantity.
    \8\ See Bats Announces Support for Hidden Post-to-Away Routed 
Orders, available at http://cdn.batstrading.com/resources/release_notes/2016/Bats-Announces-Support-for-Hidden-Post-to-Away-Routed-Orders.pdf.
    \9\ Today, all orders that are routed to post to an away market 
are routed for display on such market and receive the following 
rates: (i) Rebate of $0.0015 per share for orders routed to the 
NYSE; (ii) rebate of $0.0021 per share for Tapes A and C securities 
and a rebate of $0.0022 per share for Tape B securities for orders 
routed to NYSE Arca; (iii) rebate of $0.0015 per share for orders 
routed to NYSE MKT; (iv) rebate of $0.0015 per share for orders 
routed to Nasdaq; and (v) a rebate of $0.0020 per share for orders 
routed to BZX. See the Exchange's Fee Schedule available at http://batstrading.com/support/fee_schedule/edga/. These rates generally 
represent a pass through of the rate that Bats Trading, Inc. (``Bats 
Trading''), the Exchange's affiliated routing broker-dealer, is 
provided for adding displayed liquidity at NYSE, NYSE Arca, NYSE 
MKT, Nasdaq, or BZX when it does not qualify for a volume tiered 
reduced fee or enhanced rebate.
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Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule effective immediately.\10\
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    \10\ The Exchange initially filed the proposed fee change on May 
31, 2016 (SR-BatsEDGX-2016-20). On June 8, 2016, the Exchange 
withdrew SR-BatsEDGX-2016-20 and submitted this filing.
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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,\11\ in general, and 
furthers the objectives of Section 6(b)(4),\12\ 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 also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive. The proposed rule changes reflect a competitive 
pricing structure designed to incent market participants to direct 
their order flow to the Exchange. The Exchange believes that the 
proposed fee codes are equitable and non-discriminatory in they would 
apply uniformly to all Members. The Exchange believes the rates remains 
competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to Members.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange believes that the proposed fee codes 
represent an equitable allocation of reasonable dues, fees, and other 
charges. The proposed fees are similar to and based on the fees and 
rebates assessed or provided to Bats Trading when routing to away 
Trading Centers. For instance, like proposed fee code NA, the NYSE, 
NYSE Arca, and Nasdaq charge no fee nor provide a rebate for non-
displayed orders that add liquidity.\13\ In addition, the exchanges 
that would be covered by proposed fee code NB charge a fee of up to 
$0.0030 per share to add liquidity.\14\ In addition, the proposed rate 
for fee code NB is equal to or greater than similar routing fees 
charged by other exchanges. For example, the NYSE, NYSE MKT, Nasdaq, 
and BZX charge a fee of $0.0030 per share and NYSE Arca charges a fee 
of $0.0035 per share regardless of which destination the order is 
routed.\15\
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    \13\ See the NYSE fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf (dated 
May 23, 2016); the NYSE Arca fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (dated May 23, 2016); and the Nasdaq 
fee schedule available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. The Exchange notes that NYSE MKT 
and BZX provide a rebate of $0.0016 and $0.0017 per share 
respectively for non-displayed orders that add liquidity. See the 
NYSE MKT fee schedule available at https://www.nyse.com/publicdocs/nyse/markets/nyse-mkt/NYSE_MKT_Equities_Price_List.pdf (dated May 
23, 2016); and the BZX fee schedule available at http://batstrading.com/support/fee_schedule/bzx/.
    \14\ See the Bats BYX Exchange Inc. fee schedule available at 
http://batstrading.com/support/fee_schedule/byx/; the Bats EDGA 
Exchange, Inc. fee schedule available at http://batstrading.com/support/fee_schedule/edga/; and the Nasdaq BX, Inc. fee schedule 
available at http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing. 
The Exchange notes that it currently does not provide for routing 
orders to post on the Chicago Stock Exchange, Inc. or the National 
Stock Exchange, Inc.
    \15\ See supra note 13. Nasdaq charges a fee of $0.0035 per 
share for routed orders that are directed to another market. See the 
Nasdaq fee schedule at id.

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[[Page 41619]]

    The Exchange notes that routing through Bats Trading is voluntary. 
The Exchange is providing a service to allow Members to post orders 
with a Non-Displayed instruction to these destinations and that those 
Members seeking to post such orders to away destinations may connect to 
those destinations directly and be charged the fee or provided the 
rebate from that destination. Therefore, the Exchange believes the 
rates for proposed fee codes NA and NB are equitable and reasonable 
because they are related to the rates provided by the away exchange and 
reasonably account for the routing service provided for by the 
Exchange. Lastly, the Exchange believes that the proposed amendments 
are non-discriminatory because it applies uniformly to all Members and 
that the proposed rates are directly related to rates provided by the 
destinations to which the orders may be routed.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendment to its Fee 
Schedule would 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 the proposed changes 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. For example, routing through Bats Trading is 
voluntary and Members seeking to post such orders to away destinations 
may connect to those destinations directly and be charged the fee or 
provide the rebate from that destination. 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 would 
not burden intramarket competition because the proposed rate would 
apply uniformly to all Members.

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 \16\ and paragraph (f) of Rule 19b-4 
thereunder.\17\ 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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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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-BatsEDGX-2016-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsEDGX-2016-23. 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 Number SR-BatsEDGX-2016-23, and should 
be submitted on or before July 18, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-15076 Filed 6-24-16; 8:45 am]
 BILLING CODE 8011-01-P