[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28924-28927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13229]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80977; File No. SR-BatsEDGX-2017-30]


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

June 20, 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 June 12, 2017, Bats EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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

[[Page 28925]]

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 EDGX 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 applicable to its 
equities trading platform (``EDGX Equities'') to: (i) Modify the rates 
associated with fee codes AA, RA and RR; and (ii) decrease the 
condition necessary to qualify for the enhanced rebate provided 
pursuant to the Investor Depth Tier under footnote 1. The Exchange 
notes that Bats EDGA Exchange, Inc. (``EDGA'') is implementing certain 
pricing changes effective June 1, 2017, including modification of 
various fees and rebates to add and remove liquidity with a displayed 
or IOC order to a flat fee of $0.0003 per share to add or remove 
liquidity with a displayed or IOC order.\6\ The proposed changes to AA, 
RA, and RR are proposed in light of these changes.
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    \6\ See Press Release, Bats Announces Fee Overhaul of EDGA 
Equities Exchange (May 30, 2017), available at http://ir.cboe.com/press-releases/2017/05-30-2017.aspx.
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Fee Code AA
    The Exchange proposes to modify the rate associated with orders 
yielding fee code AA, which results from an order routed to EDGA using 
ALLB routing strategy,\7\ from a $0.0002 per share rebate to a fee of 
$0.0003 per share for securities priced at or above $1.00. The Exchange 
does not propose to modify the rate for orders yielding fee code AA for 
securities priced below $1.00, which are currently not charged a fee 
nor provided a rebate.
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    \7\ ALLB is a routing option under which the order checks the 
System for available shares and is then sent to the Bats BYX 
Exchange, Inc. (``BYX''), EDGA, and Bats BZX Exchange, Inc. (``BZX'' 
collectively with the Exchange, BYX, and EDGA, the ``BGM Affiliated 
Exchanges''). See the Exchange's routing strategies available at 
http://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf. See also Exchange Rule 11.11(g)(3).
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Fee Code RA
    The Exchange proposes to decrease the fee associated with orders 
yielding fee code RA, which results from an order routed to EDGA which 
adds liquidity, from a fee of $0.0005 per share to a fee of $0.0003 per 
share for securities priced at or above $1.00. The Exchange does not 
propose to modify the rate for orders yielding fee code RA for 
securities priced below $1.00, which are currently not charged a fee 
nor provided a rebate.
Fee Code RR
    The Exchange proposes to decrease the rate associated with orders 
yielding fee RR, which result from an order routed to EDGA using the 
Destination Specific routing strategy (also known as ``DIRC''),\8\ from 
a rebate of $0.0002 per share to a fee of $0.0003 per share for all 
securities priced at or above $1.00. The Exchange does not propose to 
modify the rate for securities priced below $1.00.
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    \8\ See the Exchange's routing strategies available at http://cdn.batstrading.com/resources/features/bats_exchange_routing-strategies.pdf. See also Rule 11.11(g)(14).
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Single MPID Investor Tier
    The Exchange currently offers nine Add Volume Tiers under footnote 
4, which provide enhanced rebates ranging from $0.0025 to $0.0032 per 
share for qualifying orders which yield fee codes B,\9\ V,\10\ Y,\11\ 3 
\12\ and 4.\13\ The Exchange proposes to modify the criteria necessary 
to achieve the Investor Depth Tier as described below.
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    \9\ Fee code B is appended to displayed orders which add 
liquidity to Tape B and is provided a rebate of $0.0020 per share. 
See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/.
    \10\ Fee code V is appended to displayed orders which add 
liquidity to Tape A and is provided a rebate of $0.0020 per share.
    \11\ Fee code Y is appended to displayed orders which add 
liquidity to Tape C and is provided a rebate of $0.0020 per share. 
Id.
    \12\ Fee code 3 is appended to displayed orders which add 
liquidity to Tape A or C during the post-market or pre-market 
sessions and is provided a rebate of $0.0020 per share. Id.
    \13\ Fee code 4 is appended to displayed orders which add 
liquidity to Tape B during the post-market or pre-market sessions 
and is provided a rebate of $0.0020 per share. Id.
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     Currently, under the Investor Depth Tier a Member may be 
provided an enhanced rebate of $0.0033 per share where that Member: (i) 
Adds an ADV \14\ greater than or equal to 0.15% of the TCV; \15\ (ii) 
has an ``added liquidity'' as a percentage of ``added plus removed 
liquidity'' greater than or equal to 85%; and (iii) adds an ADV greater 
than or equal to 400,000 shares as non-displayed orders that yield fee 
code HA,\16\ HI,\17\ and/or MM.\18\ As amended, under the Investor 
Depth Tier a Member may be provided an enhanced rebate of $0.0033 per 
share where that Member: (i) Adds an ADV greater than or equal to 0.12% 
of the TCV; (ii) has an ``added liquidity'' as a percentage of ``added 
plus removed liquidity'' greater than or equal to 85%; and (iii) adds 
an ADV greater than or equal to 400,000 shares as non-displayed orders 
that yield fee code HA, HI, and/or MM.
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    \14\ ``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.
    \15\ ``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. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/.
    \16\ Fee code HA is appended to non-displayed orders which add 
liquidity on the Exchange and are provided an enhanced rebate of 
$0.0015 for securities priced at or above $1.00, and $0.0003 for 
securities priced below $1.00. Id.
    \17\ Fee code HI is appended to non-displayed orders which 
receive price improvement and add liquidity on the Exchange and are 
neither charged a fee nor provided a rebate. Id.
    \18\ Fee code MM is appended to non-displayed orders which add 
liquidity on the Exchange using Mid-Point Peg and are provided an 
enhanced rebate of $0.0015 for securities priced at or above $1.00, 
and $0.0003 for securities priced below $1.00. Id.

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[[Page 28926]]

Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule immediately.\19\
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    \19\ The Exchange initially submitted the proposed fee change on 
June 1, 2017. (SR-Bats EDGX-2017-27). On, June 12, 2017 the Exchange 
withdrew SR-Bats EDGX-2017-27 and submitted this filing.
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\20\ in general, and 
furthers the objectives of Section 6(b)(4),\21\ 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 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.
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    \20\ 15 U.S.C. 78f.
    \21\ 15 U.S.C. 78f(b)(4).
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Modification of the Investor Depth Add Tier
    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.
Fee Codes AA, RA, and RR
    As noted above, EDGA is implementing certain pricing changes 
effective June 1, 2017, including modification of various fees and 
rebates to and remove liquidity with a displayed or IOC order to a flat 
fee of $0.0003 per share to add or remove liquidity with a displayed or 
IOC order.\22\ The changes to fee codes AA, RA, and RR are proposed in 
light of these changes and reflect a pass-through of the pricing 
provided by EDGA. As the pricing in securities priced at or above $1.00 
reflects the same pricing a Member would receive for participation on 
EDGA directly and the pricing in securities priced below $1.00 is based 
on the current pricing model applied by the Exchange, the Exchange 
believes the proposed fees are reasonable and equitably allocated. The 
Exchange further believes the proposed fees are non-discriminatory 
because they apply uniformly to all Members.
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    \22\ See supra, note 4.
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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 changes to the Exchange's routing pricing 
burden competition, as they are based on the pricing on other venues. 
Similarly, the Exchange does not believe that 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 EDGX 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. 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 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.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 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-BatsEDGX-2017-30 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-BatsEDGX-2017-30. 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

[[Page 28927]]

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-BatsEDGX-2017-30, and should be submitted on or before July 
17, 2017.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13229 Filed 6-23-17; 8:45 am]
 BILLING CODE 8011-01-P