[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46738-46739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16850]
[[Page 46738]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78306; File No. SR-BatsBZX-2016-33]
Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of Bats BZX Exchange, Inc.
July 12, 2016.
Pursuant to 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 July 1, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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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\17\ 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)(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 its Fee Schedule to adopt a
new tier under footnote 1 called the Cross-Asset Add Volume Tier.
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 its Fee Schedule to adopt a new tier
under footnote 1 called the Cross-Asset Add Volume Tier.
Currently, with respect to the Exchange's equities trading platform
(``BZX Equities'') the Exchange determines the liquidity adding rebate
that it will provide to Members using the Exchange's tiered pricing
structure. Under such pricing structure, a Member will receive a rebate
of anywhere between $0.0020 and $0.0034 per share executed, depending
on the volume tier for which such Member qualifies. Included amongst
the volume tiers offered by the Exchange are various tiers for purposes
of BZX Equities pricing, which require participation on the Exchange's
options platform (``BZX Options'') and are generally referred to as
``Cross-Asset Tiers''. For instance, pursuant to current footnote 12 of
the Fee Schedule, the Exchange offers a Cross-Asset Tape B Tier, which
provides an enhanced rebate of $0.0028 [sic] per share on orders that
add liquidity in Tape B securities submitted by Members with: (1) A
Tape B Step-Up Add TCV \5\ from February 2015 equal to or greater than
0.06%, and (2) Options Market Maker Add TCV \6\ equal to or greater
than 0.75%.
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\5\ As defined in the Exchange's Fee Schedule.
\6\ Id.
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In connection with the proposed tier described below, the Exchange
proposes to adopt a definition for Options Customer Add TCV that is
similar to the definition of Options Market Maker Add TCV set forth on
the Exchange's Fee Schedule. As proposed, ``Options Customer Add TCV''
for purposes of equities pricing would mean ``ADAV resulting from
Customer orders as a percentage of TCV, using the definitions of ADAV,
Customer and TCV as provided under the Exchange's fee schedule for BZX
Options.''
The Exchange proposes to adopt a new tier under footnote 1 titled
the ``Cross-Asset Add Volume Tier.'' Under the Cross-Asset Add Volume
Tier, the Exchange is proposing to provide a rebate of $0.0028 per
share to Members with: (1) An ADAV as a percentage of TCV equal to or
greater than 0.15%; and (2) an Options Customer Add TCV equal to or
greater than 0.10%. As is the case with any other rebates on the Fee
Schedule, to the extent that a Member qualifies for higher rebates than
those provided under the proposed Cross-Asset Add Volume Tier, the
higher rebates shall apply.
Implementation Date
The Exchange proposes to implement these amendments to its Fee
Schedule immediately.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of section 6 of the Act,\7\ in general, and
furthers the objectives of section 6(b)(4),\8\ 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 change reflects a competitive
pricing structure designed to incent market participants to direct
their order flow to the Exchange. The Exchange believes that the
proposed tier is equitable and non-discriminatory in it would apply
uniformly to all Members. The Exchange believes the rates remain
competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to Members.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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Volume-based rebates and fees such as the proposed Cross-Asset Add
Volume Tier have been widely adopted by equities and options exchanges
and are equitable because they are open to all Members on an equal
basis and provide additional benefits or discounts that are reasonably
related to the value to an exchange's market quality associated with
higher levels of market activity, such as higher levels of liquidity
provision and/or growth patterns, and introduction of higher volumes of
orders into the price and volume discovery processes.
The Exchange believes that the proposal to add a Cross-Asset Add
Volume Tier is a reasonable, fair and equitable, and not unfairly
discriminatory allocation of fees and rebates because it will provide
Members with an additional incentive to reach certain thresholds on
both BZX Equities and BZX Options. The increased liquidity from this
proposal also benefits all investors by deepening the
[[Page 46739]]
BZX Equities and BZX Options liquidity pools, offering additional
flexibility for all investors to enjoy cost savings, supporting the
quality of price discovery, promoting market transparency and improving
investor protection. Such pricing programs thereby reward a Member's
growth pattern on the Exchange and such increased volume increases
potential revenue to the Exchange, and will allow the Exchange to
continue to provide and potentially expand the incentive programs
operated by the Exchange. To the extent a Member participates on the
Exchange but not on BZX Options, the Exchange does believe that the
proposal is still reasonable, equitably allocated and non-
discriminatory with respect to such Member based on the overall benefit
to the Exchange resulting from the success of BZX Options. As noted
above, such success allows the Exchange to continue to provide and
potentially expand its existing incentive programs to the benefit of
all participants on the Exchange, whether they participate on BZX
Options or not. The proposed pricing program is also fair and equitable
in that membership in BZX Options is available to all market
participants which would provide them with access to the benefits on
BZX Options provided by the proposed changes, as described above, even
where a member of BZX Options is not necessarily eligible for the
proposed increased rebates on the Exchange. Further, the proposed
changes will result in Members receiving either the same or an
increased rebate than they would currently receive.
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 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 change will impair the ability of Members or competing venues
to maintain their competitive standing in the financial markets.
The Exchange 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 structures to be unreasonable or excessive. The
proposed changes are generally intended to enhance the rebates for
liquidity added to the Exchange, which is intended to draw additional
liquidity to the Exchange. The Exchange does not believe the proposed
amendments would burden intramarket competition as they would be
available to all Members uniformly.
The Exchange does not believe that the proposed new Cross-Asset Add
Volume Tier would burden competition, but instead, enhances
competition, as it is intended to increase the competitiveness of and
draw additional volume to the Exchange.
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 \9\ and paragraph (f) of Rule 19b-4
thereunder.\10\ 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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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-BatsBZX-2016-33 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-BatsBZX-2016-33. 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-BatsBZX-2016-33 and should
be submitted on or before August 8, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16850 Filed 7-15-16; 8:45 am]
BILLING CODE 8011-01-P