[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63239-63241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22033]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78792; File No. SR-BatsBZX-2016-56]


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.

September 8, 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 August 31, 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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    \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 to amend its fees and 
rebates applicable to Members \5\ and non-Members of the Exchange 
pursuant to BZX Rules 15.1(a) and (c).
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    \5\ A 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to: (i) Adopt a new 
tier called the Take Volume Tier under footnote 3; and (ii) add 
definitions of Options Customer Remove TCV and Step-Up Remove TCV, as 
described below, to the Definitions section of its fee schedule.
    Currently, with respect to the Exchange's equities trading platform 
(``BZX Equities'') the Exchange determines rebates and fees that it 
will apply to Members using the Exchange's tiered pricing structure. 
Under the Exchange's pricing structure, a Member will receive a 
standard rebate of either $0.0020 (for Tapes A and C) or $0.0025 (for 
Tape B) on orders that add liquidity and will be assessed a standard 
fee of $0.0030 per share executed on orders that remove liquidity. 
Reduced fees and increased rebates are available 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 footnote 3 of the BZX 
Equities Fee Schedule, the Exchange offers three Cross-Asset Step-Up 
Tiers, which provide enhanced rebates ranging from of $0.0027 to 
$0.0029 per share on displayed orders that add liquidity in Tape A, B 
and C securities submitted by Members with qualifying Step-Up Add TCV 
\6\ on BZX Options.
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    \6\ As defined in the Exchange's Fee Schedule.
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    In connection with the proposed tier described below, the Exchange 
proposes to adopt definitions for Options Customer Remove TCV and Step-
Up Remove TCV. The proposed definition for Options Customer Remove TCV 
is based on and similar to the definition of Options Customer Add TCV 
set forth on the Exchange's Fee Schedule. As proposed, ``Options 
Customer Remove TCV'' for purposes of equities pricing would mean ADV 
\7\ resulting from Customer \8\ orders that remove liquidity as a 
percentage of TCV,\9\ using the definitions of ADV, Customer and TCV as 
provided under the Exchange's fee schedule for BZX Options. The 
proposed definition for Step-Up Remove TCV is based on and similar to 
the definition of Step-Up Add TCV set forth on the Exchange's Fee 
Schedule. As proposed, ``Step-Up Remove TCV'' for purposes of equities 
pricing would mean ADV resulting from orders that remove liquidity as a 
percentage of TCV in the relevant baseline month subtracted from 
current ADV resulting from orders that remove liquidity as a percentage 
of TCV.
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    \7\ Id.
    \8\ Id.
    \9\ Id.
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    The Exchange proposes to adopt a new tier entitled ``Take Volume 
Tier'' under footnote 3, applicable to orders yielding fee codes BB, N 
and W. Under the Take Volume Tier, the Exchange is proposing to provide 
a reduced fee of $0.00295 per share to Members with: (1) Options 
Customer Remove TCV equal to or greater than 0.30%; and (2) Step-Up 
Remove TCV from July 2016 equal to or greater than 0.05%. As is the 
case with any other fee on the Fee Schedule, to

[[Page 63240]]

the extent that a Member qualifies for a lower fee than those provided 
under the proposed Take Volume Tier, the lower fee shall apply.
Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule as of September 1, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ 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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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    Volume-based rebates and fees such as the proposed Take 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 Take 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 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 a lower fee 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 offer an incentive resulting 
in reduced fees for removing liquidity on the Exchange, which is 
intended to draw additional participants 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 Take 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 \12\ and paragraph (f) of Rule 19b-4 
thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-2016-56 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-2016-56. This 
file number should be included on the

[[Page 63241]]

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 Number SR-BatsBZX-2016-56 and should be submitted on or before 
October 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22033 Filed 9-13-16; 8:45 am]
BILLING CODE 8011-01-P