Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 13243 

2Request of the United States Postal Service to 

Add Parcel Select Contract 1 to Competitive 

Product List and Notice of Filing (Under Seal) of 

Contract and Supporting Data, December 23, 2010, 

at 1. 

3Notice of United States Postal Service of Change 

in Prices Pursuant to Amendment to Parcel Select 

Contract 1, March 3, 2011 (Notice). 

4 Decision of the Governors of the United States 

Postal Service on Establishment of Rate and Class 

Not of General Applicability for Parcel Select 

Service (Governors’ Decision No. 11–3), February 

28, 2011. 

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). 

5A Member is any registered broker or dealer that 

has been admitted to membership in the Exchange. 

Contract 1 is an agreement between the 

Postal Service and StartSampling, Inc. 

(StartSampling) to license and distribute 

the ‘‘Sample Showcase’’ box.2 The 

Sample Showcase box is a Postal 

Service-branded parcel box designed to 

contain product samples and other 

advertising material from companies 

who wish to advertise their goods and 

services. Id. Attachment B at 1. 

On March 3, 2011, the Postal Service 

filed notice of a change in prices to 

Parcel Select Contract 1, which amends 

the terms of the agreement.3 The Notice 

includes four attachments: 

• Attachment A—a redacted version 

of Governors’ Decision No. 11–3, 

certification of the Governors’ vote, and 

an analysis of the amendment; 4

• Attachment B—a redacted version 

of the Addendum to Licensing and 

Shipping Services Agreement Between 

the United States Postal Service and 

StartSampling Regarding Sample 

Showcase (Addendum); 

• Attachment C—a certified statement 

of compliance with 39 U.S.C. 3633(a); 

and 

• Attachment D—an application for 

non-public treatment of materials filed 

under seal. 

The Postal Service included a 

redacted version of the supporting 

financial documentation as separate 

Excel files. The Postal Service filed the 

unredacted Governors’ Decision No. 11– 

3, Addendum, and supporting financial 

documentation under seal. Id. at 1–2. 

Substantively, the Notice seeks 

approval of the Addendum, which 

establishes an alternative per-piece 

charge for Sample Showcase boxes that 

comply with certain weight and revenue 

restrictions. The alternative per-piece 

charge equals the applicable published 

postage rate and the costs to the Postal 

Service of procuring the Sample 

Showcase box. Id. Attachment B at 1. 

StartSampling will pay the Postal 

Service based on the revenue it derives 

from companies for placing product 

samples or other advertising material in 

the box. For each box mailed at the 

alternative per-piece charge, the Postal 

Service will receive a portion of that 

revenue exceeding StartSampling’s costs 

in mailing the box. Id. Attachment B at 

2. 

The Addendum also enables 

StartSampling to mail certain Sample 

Showcase boxes previously prohibited 

under the agreement as long as those 

boxes meet specific content restrictions. 

The Postal Service states that the 

Addendum will become effective the 

day the Commission completes its 

review of the Notice. Id. at 1. 

II. Notice of Filings 

The Commission reopens Docket Nos. 

MC2011–16 and CP2011–53 to consider 

the issues raised by the Notice. 

Interested persons may submit 

comments on whether the Notice is 

consistent with the policies of 39 U.S.C. 

3632, 3633, or 3642, as well as 39 CFR 

part 3015. Comments are due no later 

than March 11, 2011. The public 

portions of these filings can be accessed 

via the Commission’s Web site (http:// 

www.prc.gov). 

The Commission appoints John P. 

Klingenberg to serve as Public 

Representative in this proceeding. 

III. Ordering Paragraphs 

It is ordered: 

1. The Commission reopens Docket 

Nos. MC2011–16 and CP2011–53 to 

consider the matters raised by the 

Notice. 

2. Pursuant to 39 U.S.C. 505, John P. 

Klingenberg is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public for this 

aspect of these dockets. 

3. Comments by interested persons in 

these proceedings are due no later than 

March 11, 2011. 

4. The Secretary shall arrange for 

publication of this notice and order in 

the Federal Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2011–5409 Filed 3–9–11; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64033; File No. SR–BATS– 

2011–008] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

March 4, 2011. 

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 1, 

2011, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes [sic] amend 

the fee schedule applicable to 

Members 5 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). While changes to the fee 

schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on March 1, 2011. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.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. 


jdjones on DSK8KYBLC1PROD with NOTICES
13244 Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 

6An order that is entered at the most aggressive 

price both on the BATS Options book and 

according to then current OPRA data will be 

determined to have set the NBB or NBO for 

purposes of the NBBO Setter Rebate without regard 

to whether a more aggressive order is entered prior 

to the original order being executed. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(4). 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to modify the 

‘‘Options Pricing’’ section of its fee 

schedule to: (i) Adopt a definition for 

average daily volume, or ‘‘ADV’’; (ii) 

introduce a tiered pricing structure 

applicable to the fees for removing 

liquidity from the BATS options market 

(‘‘BATS Options’’); (iii) expand and 

modify the program that provides a 

rebate specifically for orders that set 

either the national best bid (the ‘‘NBB’’) 

or the national best offer (the ‘‘NBO’’) 

subject to average daily volume 

requirements; and (iv) make clarifying 

changes to the standard routing section 

of the fee schedule. 

(a) Definition of ADV 

In order to accommodate certain 

changes described below, the Exchange 

proposes to adopt a definition of average 

daily volume, or ADV, for purposes of 

the fee schedule. The Exchange is not 

proposing any substantive change to its 

calculation of ADV, which is currently 

applicable only to the NBBO Setter 

Rebate, as described below. Instead, the 

Exchange is proposing the definition to 

provide more clarity and for ease of 

reference throughout the fee schedule. 

As proposed, ADV will mean average 

daily volume calculated as the number 

of contracts added or removed, 

combined, per day on a monthly basis. 

The Exchange proposes to make clear in 

the definition of ADV that routed 

contracts are not included in the 

Exchange’s calculation of ADV, but 

rather, only volume executed on the 

Exchange counts towards a Member’s 

ADV. 

(b) Tiered Pricing To Access Liquidity 

The Exchange currently charges $0.25 

per contract for customer orders and 

$0.35 per contract for Firm and Market 

Maker orders that remove liquidity from 

BATS Options. The Exchange proposes 

to increase the standard fee for 

removing liquidity to $0.28 per contract 

for customer orders and $0.38 per 

contract for Firm and Market Maker 

orders. The Exchange also proposes to 

adopt two tiers through which Members 

can realize lower liquidity removal fees, 

as further described below. 

First, the Exchange proposes to charge 

$0.25 per contract for a Customer order 

and $0.35 per contract for a Firm or 

Market Maker order that removes 

liquidity from the BATS Options order 

book where the Member has an ADV of 

50,000 or more contracts. Accordingly, 

the Exchange is not proposing to change 

the charge to remove liquidity from 

BATS Options for Members with an 

ADV of 50,000 or more. 

Second, the Exchange proposes to 

charge $0.27 per contract for a Customer 

order and $0.37 per contract for a Firm 

or Market Maker order that removes 

liquidity from the BATS Options order 

book where the Member has an ADV of 

15,000 or more, but fewer than 50,000 

contracts. Thus, for Members with ADV 

of between 15,000 and 49,999 contracts, 

Members will be charged $0.02 more 

per contract for their orders than such 

Members are charged today. 

(c) Expansion and Modification of 

NBBO Setter Rebate Program 

The Exchange currently offers a rebate 

upon execution for all orders that add 

liquidity that sets either the NBB or 

NBO (the ‘‘NBBO Setter Rebate’’) 6 so 

long as the Member submitting the order 

achieves an ADV of 20,000 contracts 

executed during the calendar month. 

The NBBO Setter Rebate currently 

offered by the Exchange is $0.50 per 

contract. The Exchange proposes to 

increase the ADV requirement for this 

$0.50 rebate to 50,000 contracts and to 

create a second tier eligible for a NBBO 

Setter Rebate. The new NBBO Setter 

Rebate for Members with a lower ADV 

will be a $0.40 rebate and will apply 

where the Member has an ADV of 

15,000 or more, but fewer than, 50,000 

contracts. The Exchange also proposes 

to make clear on the fee schedule that 

the NBBO Setter Rebate, whether based 

on the lower or the higher ADV level, 

supersedes any other applicable 

liquidity rebates. 

(d) Clarifications to Routing Pricing 

Currently, the BATS Options fees for 

Standard Best Execution Routing or 

Destination Specific Order routing fees 

are dependent on the venues at which 

such orders are executed. Certain 

venues offer pricing that the Exchange 

has defined as ‘‘Make/Take’’ in certain 

issues and then pricing under a more 

traditional pricing structure (hereafter, 

‘‘Classic’’ pricing). As defined on the fee 

schedule, Make/Take pricing refers to 

executions at the identified Exchange 

under which ‘‘Post Liquidity’’ or ‘‘Maker’’ 

rebates (‘‘Make’’) are credited by that 

exchange and ‘‘Take Liquidity’’ or 

‘‘Taker’’ fees (‘‘Take’’) are charged by that 

exchange. The Exchange proposes 

certain changes to its routing schedule 

in order to further delineate between 

executions in Make/Take issues and 

Classic issues at the options exchanges 

that maintain both types of pricing, 

specifically, NYSE Arca, the 

International Stock Exchange, and 

NASDAQ OMX PHLX. The Exchange is 

not proposing any changes to the 

pricing of its standard routing or 

destination specific routing strategies. In 

addition to these changes, the Exchange 

is proposing to add an additional page 

break to its fee schedule and to indicate 

that the options pricing section 

continues onto page three of the version 

of the fee schedule maintained on its 

Web site. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6 of the Act.7

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Section 6(b)(4) of the Act,8 in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among members and other 

persons using any facility or system 

which the Exchange operates or 

controls. 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 levels at a 

particular venue to be excessive. 

The changes to Exchange execution 

fees and rebates proposed by this filing 

are intended to attract order flow to 

BATS Options by offering competitive 

pricing, especially for those who add 

liquidity that sets the NBB or NBO. As 

a general matter, the Exchange believes 

that the NBBO Setter Program benefits 

all Members with the potential of 

increased and aggressively priced 

liquidity at the Exchange. The 

expansion of the NBBO Setter Program 

to Members with a lower ADV threshold 

(albeit with a lower rebate) will result in 

increased payments that will benefit 

some Members due to the increased 

revenue those Members will receive. 

With the increase to the current 

threshold of 20,000 contracts ADV to 

50,000 contracts ADV, some Members 

will no longer qualify for the highest 

potential rebate, though they will still 

receive a higher rebate than otherwise 

offered by the Exchange. The Exchange 

believes that the NBBO Setter Rebate is 


jdjones on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 13245 

9See Securities Exchange Act Release No. 61869 

(April 7, 2010), 75 FR 19449 (April 14, 2010) (SR– 

ISE–2010–25) (notice of filing and immediate 

effectiveness to amend fees applicable to the 

International Securities Exchange, including 

providing increased rebates to market makers for 

being on the NBB or NBO for at least 80% during 

a given month); Securities Exchange Act Release 

No. 61987 (April 27, 2010), 75 FR 24771 (May 5, 

2010) (SR–C2–2010–001) (notice of filing and 

immediate effectiveness to establish fees applicable 

to C2 Options Exchange, including providing 

Preferred Market Makers with participation 

entitlements when they are at the NBBO, regardless 

of time priority). 

10See Securities Exchange Act Release No. 57253 

(February 1, 2008), 73 FR 7352 (February 7, 2008) 

(SR–Phlx–2008–08) (notice of filing and immediate 

effectiveness to amend fees applicable to the 

Philadelphia Stock Exchange, including adopting a 

tiered floor broker options subsidy based on 

meeting specified trading volume requirements). 

11See E-mail from Anders Franzon, VP, Associate 

General Counsel, BATS, to Johnna B. Dumler, 

Special Counsel, Commission, dated March 2, 2011. 

12 15 U.S.C. 78s(b)(3)(A)(ii). 

13 17 CFR 240.19b–4(f)(2). 14 17 CFR 200.30–3(a)(12). 

analogous to similar proposals designed 

to encourage market participants to 

submit aggressively priced orders 

previously implemented at other 

options exchanges.9 Additionally, the 

Exchange believes that the proposed 

NBBO Setter Rebate, now in place on 

BATS Options for two months, has and 

will continue to incentivize the entry of 

more aggressive orders that will create 

tighter spreads, benefitting both 

Members and public investors. 

The Exchange also believes that its 

proposed use of a volume threshold to 

qualify for the NBBO Setter Rebate and 

to qualify for lower liquidity removal 

fees is analogous to tiered pricing 

structures that are in place at other 

exchanges.10 While the establishment of 

tiered pricing for removing liquidity 

from the BATS Options order book will 

result in a small increase for some 

Members, this fee still remains lower 

than other markets with similar fee 

structures, such as the NASDAQ 

Options Market and NYSE Arca in 

Make/Take Issues. Currently, for many 

of the transactions occurring on the 

Exchange, the Exchange either does not 

earn a fee because it charges the same 

fee to the liquidity remover as it rebates 

the liquidity maker.11 The increase in 

liquidity removal fees so that the 

Exchange is earning a small fee will 

provide the Exchange with additional 

revenue to both fund the NBBO Setter 

Rebate and to fund its operations 

generally. Volume-based discounts such 

as the liquidity removal fee tiers 

proposed in this filing have been widely 

adopted in the cash equities markets, 

and are equitable and not unreasonably 

discriminatory because they are open to 

all members on an equal basis and 

provide discounts that are reasonably 

related to the value to an exchange’s 

market quality associated with higher 

levels of market activity, such as higher 

levels of liquidity provision and 

introduction of higher volumes of orders 

into the price and volume discovery 

process. Accordingly, the Exchange 

believes that the proposal is not 

unreasonably discriminatory because it 

is consistent with the overall goals of 

enhancing market quality. Finally, the 

Exchange believes that the adoption of 

a definition for ADV and the proposed 

clarifications to the standard routing 

pricing section of the fee schedule will 

help to avoid potential confusion 

regarding the Exchange’s fee schedule. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A)(ii) of 

the Act 12 and Rule 19b–4(f)(2) 

thereunder,13 the Exchange has 

designated this proposal as establishing 

or changing a due, fee, or other charge 

applicable to the Exchange’s Members 

and non-members, which renders the 

proposed rule change effective upon 

filing. 

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. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–BATS–2011–008 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BATS–2011–008. This file 

number should be included on the 

subject line if e-mail 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 a.m. and 3 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 Number SR–BATS– 

2011–008 and should be submitted on 

or before March 31, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5441 Filed 3–9–11; 8:45 am] 

BILLING CODE 8011–01–P 


jdjones on DSK8KYBLC1PROD with NOTICES