[Federal Register Volume 82, Number 77 (Monday, April 24, 2017)]
[Notices]
[Pages 18943-18945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08163]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80478; File No. SR-BatsBZX-2017-22]


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

April 18, 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 April 12, 2017, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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 BZX Rules 
15.1(a) and (c).
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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 applicable to its 
equities trading platform (``BZX Equities'') to: (i) Add new tiers 
under footnotes 1 and 4; and (ii) eliminate tier 4 under footnote 3.
Add Volume Tiers Under Footnote 1
    The Exchange currently offers nine Add Volume Tiers under footnote 
1, which provide an enhanced rebate of $0.0025 to $0.0032 per share for 
qualifying orders which yield fee codes B, V, or Y.\6\ The Exchange now 
proposes to add two additional tiers which will provide an enhanced 
rebate per share for qualifying orders which yield fee code 
HA.7 8
---------------------------------------------------------------------------

    \6\ Fee codes B, V, and Y are appended to displayed orders that 
add liquidity in tape B, A, or C, respectively. See the Exchange's 
fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
    \7\ Fee code HA is appended to non-displayed orders which add 
liquidity. Id.
    \8\ The Exchange proposes to add additional labels to the table 
in footnote 1 to further clarify which tiers apply to orders 
yielding the differentiating fee codes. The Exchange also proposes 
to append footnote 1 to fee code HA in connection with this change.
---------------------------------------------------------------------------

     Under the proposed Non-Displayed Add Volume Tier 1, a 
Member may receive an enhanced rebate of $0.0020 per share where they 
add an ADV greater than or equal to 0.09% of the TCV, as Non-Displayed 
orders that yield fee codes HA or HI.
     Under the proposed Non-Displayed Add Volume Tier 2, a 
Member may receive an enhanced rebate of $0.0025 per share where they 
add an ADV greater than or equal to 0.18% of the TCV, as Non-Displayed 
orders that yield fee codes HA or HI.
Single MPID Investor Tier Under Footnote 4
    The Exchange currently offers one Single MPID Investor Tier under 
footnote 4, which provides an enhanced rebate of $0.0031 per share for 
qualifying orders which yield fee codes B, V, or Y. The distinction 
between the existing tier under footnote 4 and other tiers offered by 
the Exchange, is that the volume measured to determine whether a Member 
qualifies is performed on an MPID by MPID basis. The Exchange now 
proposes to add an additional single MPID tier which will provide an 
enhanced rebate per share for qualifying orders which yield fee codes 
B, V, or Y. Under the proposed Step-Up Add Tier under footnote 4, a 
Member may receive an enhanced rebate of $0.0027 per share where the 
MPID has a Step-Up ADAV from November 2016, greater than or equal to 
500,000 shares.
Eliminate Tier 4 Under Footnote 3
    The Exchange currently offers five Cross-Asset Step-Up Tiers under 
footnote 3, which provide an enhanced rebate per contract ranging from 
$0.0027 to $0.0032 per share for qualifying orders. Tiers 1 through 4 
apply to orders which yield fee codes B, V, or Y. Tier 5 applies to 
orders which yield fee codes BB, N, or W.\9\ The Exchange now proposes 
to eliminate Tier 4 under footnote 3, which provides a rebate of 
$0.0032 per share for Members that have an Options Step-Up Add TCV in 
Customer orders from October 2016 baseline greater than or equal to 
0.35%.\10\
---------------------------------------------------------------------------

    \9\ Fee codes BB, N, and W are appended to orders that remove 
liquidity in tape B, C, or A, respectively. See the Exchange's fee 
schedule available at http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
    \10\ In connection with the elimination of Tier 4, the Exchange 
proposes that Tier 5 be renamed to Tier 4.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule immediately.\11\
---------------------------------------------------------------------------

    \11\ The Exchange initially filed the proposed amendments to its 
fee schedule on March 31, 2017 (SR-BatsBZX-2017-21). On April 12, 
2017, the Exchange withdrew SR-BatsBZX-2017-21 and then subsequently 
submitted this filing (SR-BatsBZX-2017-22).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ in particular, as it is 
designed to provide

[[Page 18944]]

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 or 
incentives to be insufficient. The proposed rule changes reflect a 
competitive pricing structure designed to incentivize market 
participants to direct their order flow to the Exchange.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Addition of New Volume Tiers
    The Exchange believes that the proposed modifications to the tiered 
pricing structure are reasonable, fair and equitable, and non-
discriminatory. The Exchange operates in a highly competitive market in 
which market participants may readily send order flow to many competing 
venues if they deem fees at the Exchange to be excessive or incentives 
provided to be insufficient. The proposed structure remains intended to 
attract order flow to the Exchange by offering market participants a 
competitive pricing structure. The Exchange believes it is reasonable 
to offer and incrementally modify incentives intended to help to 
contribute to the growth of the Exchange.
    Volume-based pricing such as that proposed herein have been widely 
adopted by exchanges, including the Exchange, 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 provisions and/or growth 
patterns; and (iii) introduction of higher volumes of orders into the 
price and volume discovery processes.
    Add Volume Tiers. The proposed additions of two Non-Displayed Add 
Volume Tiers reinforces the purpose of the Add Volume Tier by 
incentivizing Members to send Non-Displayed orders to the Exchange. 
Thus, the Exchange believes that the proposed modifications to the 
tiered pricing structure under footnote 1 is a reasonable, equitable, 
and not an unfairly discriminatory allocation of fees and rebates 
because they will provide Members with an incentive to reach certain 
thresholds on the Exchange by contributing a meaningful amount of order 
flow and because such an incentive is open to all Members on an equal 
basis.
    Single MPID Investor Tier. The proposed addition of a Single MPID 
Step-Up Add Tier reinforces the purpose of the Single MPID Investor 
Tier by incentivizing Members to send higher level of orders to the 
Exchange. By applying the tier on a single MPID rather than across a 
Member's entire trading activity, the Exchange is also allowing more 
Members to potentially receive the enhanced rebates for their trading 
activity related to liquidity provision. Thus, the Exchange believes 
that the proposed modification to the tiered pricing structure under 
footnote 4 is a reasonable, equitable, and not an unfairly 
discriminatory allocation of fees and rebates because it will provide 
Members with an incentive to reach certain thresholds on the Exchange 
by contributing a meaningful amount of order flow. As is true for the 
Add Volume Tiers described above, the proposed tier under footnote 4 is 
available to all Members.
Elimination of Unused Tiers
    The Exchange believes that the proposed modifications to eliminate 
Tier 4 under footnote 3 is reasonable, fair, and equitable because the 
current tier was not providing the desired result of incentivizing 
Members to increase their participation in BZX Equities and in the 
Exchange's equity options platform (``BZX Options''). Therefore, 
eliminating this tier will have a negligible effect on order flow and 
market behavior. The Exchange believes the proposed change is not 
unfairly discriminatory because it will apply equally to all 
participants.

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 any of the proposed change to the Exchange's tiered pricing 
structure burden competition, but instead, that they enhance 
competition as they are intended to increase the competitiveness of BZX 
by modifying pricing incentives in order to attract order flow and 
incentivize participants to increase their participation on the 
Exchange. 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, and to eliminate a rebate that 
has not achieved its desired result. The Exchange does not believe the 
proposed amendments would burden intramarket competition as they would 
be available to all Members uniformly.

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 \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-BatsBZX-2017-22 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-BatsBZX-2017-22. 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

[[Page 18945]]

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-BatsBZX-2017-22, and should be submitted on or before May 
15, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08163 Filed 4-21-17; 8:45 am]
BILLING CODE 8011-01-P