[Federal Register Volume 82, Number 74 (Wednesday, April 19, 2017)]
[Notices]
[Pages 18490-18492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07868]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80447; File No. SR-BatsBYX-2017-06]


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

April 13, 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 March 31, 2017, Bats BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') 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 BYX 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 amend its fee schedule to: (i) Adopt fee 
code PL; and (ii) modify its description of fee code PX. The Exchange 
recently implemented a new midpoint routing strategy known as RMPL,\6\ 
under which a MidPoint Peg Order \7\ first checks the

[[Page 18491]]

System \8\ for available shares and routes any remaining shares to 
destinations on the System routing table \9\ that support midpoint 
eligible orders. If any shares remain unexecuted after routing, they 
are posted on the BYX Book \10\ as MidPoint Peg Orders, unless 
otherwise instructed by the User.\11\ As a result of this additional 
functionality, the Exchange proposes to amend its fee schedule to adopt 
fees which would apply to orders routed pursuant to the RMPL routing 
strategy.
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    \6\ See Securities Exchange Act Release No. 79603 (December 19, 
2016), 81 FR 94440 (December 23, 2016) (SR-BatsBYX-2016-41) (``RMPL 
Filing'').
    \7\ In sum, a MidPoint Peg Order is a non-displayed Market Order 
or Limit Order with an instruction to execute at the midpoint of the 
NBBO, or, alternatively, pegged to the less aggressive of the 
midpoint of the NBBO or one minimum price variation inside the same 
side of the NBBO as the order. See Exchange Rule 11.9(c)(9).
    \8\ The term ``System'' is defined as ``the 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).
    \9\ 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. See 
Exchange 11.13(b)(3). While the process for determining the specific 
trading venues to which orders are routed is proprietary, the 
Exchange publicly discloses the trading venues associated with each 
routing strategy via its Web site at http://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf.
    \10\ The term ``BYX Book'' is defined as the ``System's 
electronic file of orders.'' See Exchange Rule 1.5(e).
    \11\ 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).
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    Fee Code PL. The Exchange proposes [sic] adopt fee code PL, which 
would apply to orders routed to Bats BZX Exchange, Inc. (``BZX''), Bats 
EDGX Exchange, Inc. (``EDGX''), the New York Stock Exchange, Inc. 
(``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), or Nasdaq Stock Market LLC 
(``Nasdaq'') using a RMPL routing strategy. Orders that yield fee code 
PL would be charged a fee of $0.0030 per share in securities priced at 
or above $1.00 and 0.29% of the trade's total dollar value in 
securities priced below $1.00.\12\
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    \12\ Pursuant to footnote 8, the Exchange charges 0.29% of the 
transactions total dollar value in securities priced below $1.00 
that are routed using the following routing strategies: Parallel D, 
Parallel 2D, ROUT, ROUX, Post to Away, RMPL, and RMPT routed 
executions. The Exchange proposes to modify footnote 8 to include 
RMPL and to append footnote 8 to fee code PL.
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    Fee Code PX. Currently, fee code PX only applies to orders routed 
using a RMPT routing strategy. Orders that yield fee code PX are 
assessed a fee of $0.0012 per share in securities priced at or above 
$1.00 and 0.29% of the trade's total dollar value in securities priced 
below $1.00. The RMPT routing strategy operates similarly to RMPL in 
that under both Mid-Point Peg Orders check the System for available 
shares and any remaining shares are then sent to destinations on the 
System routing table that support midpoint eligible orders. If any 
shares remain unexecuted after routing, they are posted on the BYX Book 
as a Mid-Point Peg Order, unless otherwise instructed by the User. 
While RMPL and RMPT operate in an identical manner, the trading venues 
that each routing strategy routes to and the order in which it routes 
them differ. The Exchange now proposes [sic] modify the application of 
fee code PX not only [sic] apply to RMPT, but to also apply RMPL. 
However, fee code PX would only apply to orders routed to destinations 
not covered by fee code PL using the RMPL routing strategy, as set 
forth above. The Exchange does not propose to modify the fee associated 
with fee code PX.
Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule on April 3, 2017.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ 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 the proposed fees under fee codes PL 
and PX for orders routed using the options RMPL routing strategy 
represents an equitable allocation of reasonable dues, fees, and other 
charges. The proposed change would enable the Exchange to charge a rate 
reasonably related to the rate that Bats Trading, Inc. (``Bats 
Trading''), the Exchange's affiliated routing broker-dealer, would be 
charged for routing orders to destinations described in fee codes PL 
and PX when it does not qualify for a volume tier reduced fee. As a 
result, when Bats Trading is charged a fee when it routes an order 
which removes liquidity from a destination described in fee codes PL 
and PX.\15\ Bats Trading will pass through these rates to the Exchange 
and the Exchange, in turn, will charge the rates under fee codes PL or 
PX, as applicable. The proposed fee under fee codes PL and PX for 
orders routed pursuant to the RMPL routing strategy would enable the 
Exchange to equitably allocate its costs among all Members.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ For example, Nasdaq, NYSE, NYSE Arca, BZX, and EDGX charge 
a fee of $0.0030 per share for orders that remove midpoint 
liquidity. See Nasdaq's fee schedule available at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2; NYSE's price 
list available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; NYSE Arca's price list available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; BZX's fee schedule available at 
http://www.bats.com/us/equities/membership/fee_schedule/bzx/; and 
EDGX's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/.
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    The Exchange notes that routing through Bats Trading is voluntary. 
Members seeking to [sic] midpoint eligible route orders to BZX, EDGX, 
NYSE, NYSE Arca, Nasdaq, or to any other destination covered by the 
RMPL routing strategy may connect to those destinations directly and be 
charged the fee or provided the rebate from that destination. The 
Exchange further believes that this pricing structure is non-
discriminatory, as it applies equally to all Members.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that this change represents a significant departure from previous 
pricing offered by the Exchange or from pricing offered by the 
Exchange's competitors. The proposed rates would apply uniformly to all 
Members, and 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 to fees would increase intermarket competition by offering 
customers an alternative means to route to destinations covered by fee 
codes PL and PX. As stated above, routing through Bats Trading is 
voluntary and Members may utilize other avenues to route orders to 
destinations covered by fee codes PL and PX, such as connecting to 
those destinations directly. Additionally, Members may opt to disfavor 
the Exchange's pricing if they believe that alternatives offer them 
better value or if they view the fees as excessive. Further, excessive 
fees would serve to impair an exchange's ability to compete for order 
flow and members rather than burdening competition. The Exchange 
believes that its proposal would not burden intramarket competition 
because the proposed rate would apply uniformly to all Members.

[[Page 18492]]

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 No. SR-BatsBYX-2017-06 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-BatsBYX-2017-06. 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-BatsBYX-2017-06, and should be 
submitted on or before May 10, 2017.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2017-07868 Filed 4-18-17; 8:45 am]
BILLING CODE 8011-01-P