[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Pages 13887-13889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05088]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80187; File No. SR-BatsEDGA-2017-04]


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

March 9, 2017.
    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 February 28, 2017, Bats EDGA Exchange, Inc. (the ``Exchange'' 
or ``EDGA'') 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 the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to EDGA Rules 
15.1(a) and (c).
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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.bats.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 modify its fee schedule to enhance its 
pricing for orders executed at the midpoint of the National Best Bid 
and Offer (``NBBO'') by: (i) Adopting new fee codes MM and MT; (ii) 
modifying footnote 2 to reflect new fee codes MM and MT; and (iii) 
adding two new tiers under new footnote 13, entitled ``Midpoint Add and 
Remove Tiers.''
Fee Codes MM and MT
    The Exchange proposes to amend its fee schedule to add two new fee 
codes, MM and MT. Fee code MM would be appended to non-displayed orders 
that add liquidity at the midpoint of the NBBO. Fee code MT would be

[[Page 13888]]

appended to non-displayed orders that remove liquidity at the midpoint 
of the NBBO. Orders that yield fee code MT [sic] or MT would be charged 
a reduced fee of $0.0008 per share in securities priced at or above 
$1.00 and 0.08% of the total dollar value of the order for securities 
priced below $1.00 per share.
    In addition, the Exchange proposes to expand the volume 
requirements for fee codes HA \6\ and HR \7\ under footnote 2 of the 
fee schedule to include proposed fee codes MM an MT. Footnote 2 
currently states that rates for fee codes HA and HR are contingent upon 
Member adding or removing an ADV of at least 1,000,000 shares non-
displayed (hidden) (yields fee codes HA, HR, DM, DT and RP) or Member 
adding an ADV of at least 8,000,000 shares (displayed and non-
displayed). Footnote 2 further states that for securities priced at or 
above $1.00, Members not meeting either minimum will be charged $0.0030 
per share for fee codes HA and HR. For securities priced below $1.00, 
Members not meeting either minimum will be charged 0.30% of the dollar 
value of the transaction.
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    \6\ Fee code HA is appended to non-displayed orders that add 
liquidity and provided a reduced fee of $0.0010 per share for orders 
in securities priced at or above $1.00 and $0.10 of the trades 
dollar value in securities priced below $1.00. See the Exchange's 
fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
    \7\ Fee code HR is appended to non-displayed orders that remove 
liquidity and provided a reduced fee of $0.0010 per share for orders 
in securities priced at or above $1.00 and $0.10 of the trades 
dollar value in securities priced below $1.00. See the Exchange's 
fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
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    The Exchange proposes to amend footnote 2 of the fee schedule to 
state that the Exchange will assess a charge of $0.0030 per share for 
Member' orders that yield fee codes MM or MT in securities over $1.00 
and a fee of 0.30% of the dollar value of the transaction for Members' 
orders that yield Flags MM or MT in securities priced below $1.00 where 
Members do not satisfy the volume requirement of the footnote 2. 
Therefore, the Exchange proposes to revise footnote 2 to state, 
``[r]ates for fee codes HA and HR, MM and MT are contingent upon Member 
adding or removing an ADV of at least 1,000,000 shares non-displayed 
(hidden) (yields fee codes HA, HR, DM, DT, MM, MT and RP) or Member 
adding an ADV of at least 8,000,000 shares (displayed and non-
displayed). For securities priced at or above $1.00, Members not 
meeting either minimum will be charged $0.0030 per share for fee codes 
HA, and HR, MM and MT. For securities priced below $1.00, Members not 
meeting either minimum will be charged 0.30% of the dollar value of the 
transaction.''
New Midpoint Add and Remove Tiers
    The Exchange proposes to offer two additional tiers under a new 
footnote 13 of the fee schedule, entitled ``Midpoint Add and Remove 
Tiers.'' Under proposed Tier 1, orders that yield new fee codes MM or 
MT would be charged a reduced fee of $0.0006 per share where the Member 
has an ADV \8\ equal to or greater than 1,200,000 shares in orders that 
yield fee codes MM or MT. Under proposed Tier 2, orders that yield new 
fee codes MM or MT would be charged a reduced fee of $0.0004 per share 
where the Member has an ADV equal to or greater than 2,500,000 shares 
in orders that yield fee codes MM or MT.
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    \8\ ADV means average daily volume calculated as the number of 
shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis. Id.
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Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule March 1, 2017.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(4),\10\ 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 believes proposed rule change represents an 
equitable allocation of reasonable dues, fees, and other charges 
because the reduced fee provided by fee codes MM and MT as well as the 
proposed tiers are intended to encourage Members to add liquidity at 
the midpoint of the NBBO. The Exchange believes that Members that add 
liquidity at the midpoint of the NBBO may receive the benefit of price 
improvement, and its associated lower rate would be a reasonable means 
by which to encourage the use of such orders. In addition, the Exchange 
believes that by encouraging the use of orders yielding MM and MT, 
Members seeking price improvement would be more motivated to direct 
their orders to the Exchange because they would have a heightened 
expectation of the availability of liquidity at the midpoint of the 
NBBO. In addition, the Exchange also believes that the proposed fee 
changes are non-discriminatory because they would apply uniformly to 
all Members.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    Lastly, the Exchange further believes that the proposed Midpoint 
Add and Remove tiers which would provide a reduced fee for orders that 
yield fee codes MM or MT where that Member satisfies certain ADV 
requirements in orders yielding fee codes MM or MT will further 
incentivize Members entering orders seeking an execution at the 
midpoint of the NBBO. In sum, the proposed tiers are designed to 
promote functionality and, in particular, to attract liquidity, which 
benefits all market participants by providing additional trading 
opportunities at the midpoint of the NBBO and increased price 
improvement opportunities.
    In addition, volume-based rebates such as that proposed herein 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: (i) 
The value to an exchange's market quality; (ii) associated higher 
levels of market activity, such as higher levels of liquidity provision 
and/or growth patterns; and (iii) the introduction of higher volumes of 
orders into the price and volume discovery processes. The Exchange 
believes that the proposed tier is a reasonable, fair and equitable, 
and not an unfairly discriminatory allocation of fees and rebates, 
because it will provide Members with an additional incentive to reach 
certain thresholds on the Exchange.

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

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. Rather, the Exchange believes the proposed rule change 
provides pricing incentives that will enhance competition amongst 
exchange [sic] for orders eligible to execute at the midpoint of the 
NBBO. The Exchange does not believe that the proposed changes represent 
a significant departure from previous pricing offered by the Exchange 
or from 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 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

[[Page 13889]]

burden intramarket competition because the proposed rates 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 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 \11\ and paragraph (f) of Rule 19b-4 
thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 No. SR-BatsEDGA-2017-04 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-BatsEDGA-2017-04. 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-BatsEDGA-2017-04, and should be 
submitted on or before April 5, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05088 Filed 3-14-17; 8:45 am]
 BILLING CODE 8011-01-P