[Federal Register Volume 82, Number 93 (Tuesday, May 16, 2017)]
[Notices]
[Pages 22587-22589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09817]



[[Page 22587]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80645; File No. SR-BatsBYX-2017-12]


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

May 10, 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 May 9, 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.
---------------------------------------------------------------------------

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

    \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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to: (i) Add a new 
tier under footnote 1, Add/Remove Volume Tiers; and (ii) modify its 
description of fee code PX.
Proposed New Tier
    The Exchange currently offers four tiers under footnote 1, Add/
Remove Volume Tiers that offer reduced fees for displayed orders that 
yield fee codes B,\6\ V \7\ and Y,\8\ and an enhanced rebate for orders 
that add liquidity yielding fee codes BB,\9\ N \10\ and W.\11\ The 
Exchange now proposes to add a new tier under footnote 1, to be known 
as Tier 4, under which a Member would be charged a reduced fee of 
$0.0016 per share on orders that yield fee codes B, V and Y, where that 
Member has an ADAV \12\ greater than or equal to 0.25% of the TCV \13\ 
and a Step-Up ADAV greater than or equal to 0.05% of the TCV from April 
2017 baseline.\14\
---------------------------------------------------------------------------

    \6\ Fee code B is appended to displayed orders that add 
liquidity to BYX (Tape B) and is assessed a fee of $0.0018 per 
share. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \7\ Fee code V is appended to displayed orders that add 
liquidity to BYX (Tape A) and is assessed a fee of $0.0018 per 
share. Id.
    \8\ Fee code Y is appended to displayed orders that add 
liquidity to BYX (Tape C) and is assessed a fee of $0.0018 per 
share. Id.
    \9\ Fee code BB is appended to orders that remove liquidity from 
BYX (Tape B) and is assessed a rebate of $0.0010 per share. Id.
    \10\ Fee code N is appended to orders that remove liquidity from 
BYX (Tape C) and is assessed a rebate of $0.0010 per share. Id.
    \11\ Fee code W is appended to orders that remove liquidity from 
BYX (Tape A) and is assessed a rebate of $0.0010 per share. See the 
Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \12\ ``ADAV'' means average daily volume calculated as the 
number of shares added per day on a monthly basis. Id.
    \13\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply. Id.
    \14\ With the addition of proposed Tier 4 under footnote 1, the 
Exchange proposes to renumber current Tier 4 as Tier 5.
---------------------------------------------------------------------------

    In connection with this change, the Exchange proposes to add a 
definition of Step-Up ADAV to the ``Definitions'' section of the fee 
schedule. As proposed, ``Step-Up ADAV'' would be defined as ``ADAV in 
the relevant baseline month subtracted from current ADAV.'' The 
Exchange proposes to add this definition in connection with the new 
tier.
Fee Code PX
    Fee code PX is appended to orders routed using the RMPL routing 
strategy \15\ to destinations not covered by fee code PL \16\ or 
destinations covered by routing strategy RMPT. Orders appended with fee 
code PX are changed a fee of $0.0012 per share. The Exchange proposes 
to amend the description of fee code PX in order to align it with the 
description of fee code PX on Bats' affiliate exchange, Bats EDGA 
Exchange, Inc. (``EDGA'').\17\ As amended, the description of fee code 
PX would state ``[r]outed using RMPL routing strategy to a destination 
not covered by Fee Code PL, or routed using RMPT routing strategy.'' 
The Exchange notes that this change is purely clerical and does not 
amend the orders to which fee code PX is appended.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 79603 (December 19, 
2016), 81 FR 94440 (December 23, 2016) (SR-BatsBYX-2016-41) (``RMPL 
Filing'').
    \16\ Fee code PL is appended to orders routed to Bats BZX 
Exchange, Inc., Bats EDGX Exchange, Inc., New York Stock Exchange, 
Inc., NYSE Arca, Inc. and the NASDAQ Stock Market LLC using RMPL 
routing strategy, and is assessed a fee of $0.0030 per share. See 
the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \17\ See EDGA's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule immediately.\18\
---------------------------------------------------------------------------

    \18\ The Exchange initially filed the proposed fee change on May 
1, 2017. (ST-BatsBYX-2017-09) [sic]. On May 9, 2017, the Exchange 
withdrew the proposed fee change and submitted this filing.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\19\ in general, and 
furthers the objectives of Section 6(b)(4),\20\ 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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Proposed New Tier
    The Exchange believes that the proposed tier under footnote 1 is 
equitable and reasonable because such pricing programs reward a 
Member's growth pattern on the Exchange and such increased volume will 
allow the Exchange to continue to provide and potentially expand the 
its incentive

[[Page 22588]]

programs. The Exchange believes that providing incentives to Members 
that demonstrate an increase over their April 2017 Step-Up ADAV through 
the proposed tier offers an additional, flexible way to encourage 
Members to add liquidity to the Exchange. The Exchange believes that 
the proposed tier is reasonable, fair and equitable because the 
liquidity from the proposed tier also benefits all investors by 
deepening the Exchange's liquidity pool, offering additional 
flexibility for all investors to enjoy cost savings, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection. The proposed definition of Step-Up Add ADV is also 
reasonable as it helps to describe the tier's required criteria and is 
identical to that adopted by other exchanges.\21\ These pricing 
programs are also not unfairly discriminatory in that it is available 
to all Members.
---------------------------------------------------------------------------

    \21\ See the Bats BZX Exchange, Inc., fee schedule available at 
http://www.bats.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    In addition, volume-based fees such as that proposed herein have 
been widely adopted by 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.
Fee Code PX
    The Exchange believes that the proposed amendment to the 
description of fee code PX is reasonable and equitable because this 
change is purely clerical and does not amend the orders to which fee 
code PX is appended. The Exchange also believes that the proposal is 
non-discriminatory because it applies uniformly to all Members. The 
proposed change is intended to align it with the description of an 
identical fee code on Bats' affiliate exchange, EDGA.\22\ Therefore, 
the Exchange believes that the proposed change will make the fee 
schedule clearer and eliminate potential investor confusion, thereby 
removing impediments to and perfecting the mechanism of a free and open 
market and a national market system, and, in general, protecting 
investors and the public interest.
---------------------------------------------------------------------------

    \22\ See EDGA's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edga/.
---------------------------------------------------------------------------

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. 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.

B. 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 \23\ and paragraph (f) of Rule 19b-4 
thereunder.\24\ 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.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 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-BatsBYX-2017-12 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-2017-12. 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 such 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-2017-12, and should be 
submitted on or before June 6,  2017.
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).


[[Page 22589]]


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

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09817 Filed 5-15-17; 8:45 am]
 BILLING CODE 8011-01-P