2108 Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices 

7 17 CFR 200.30–3(a)(12). 

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. 

6As defined on the Exchange’s fee schedule, a 

‘‘Customer’’ order is any transaction identified by 

a Member for clearing in the Customer range at the 

Options Clearing Corporation (‘‘OCC’’). 

7As defined on the Exchange’s fee schedule, ADV 

is average daily volume calculated as the number 

of contracts added or removed, combined, per day 

on a monthly basis. The fee schedule also provides 

that routed contracts are not included in ADV 

calculation. 

8As defined on the Exchange’s fee schedule, TCV 

is total consolidated volume calculated as the 

volume reported by all exchanges to the 

consolidated transaction reporting plan for the 

month for which the fees apply. 

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– 

NASDAQ–2012–001 and should be 

submitted on or before February 3, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–529 Filed 1–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66120; File No. SR–BATS– 

2011–053] 

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. 

January 9, 2012. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

30, 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 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. 

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 January 3, 2012. 

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 aspects 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 modify the 

‘‘Options Pricing’’ section of its fee 

schedule to: (i) Adopt the ‘‘Grow with 

Us’’ pricing program, which will 

provide Members with some of the 

benefits of the Exchange’s tiered pricing 

structure to the extent such Members 

are increasing their activity on the 

Exchange’s options platform (‘‘BATS 

Options’’) month over month; (ii) 

modify the fees charged by the 

Exchange to remove liquidity from 

BATS Options; (iii) modify the rebates 

provided by the Exchange for 

Customer 6 orders that add liquidity to 

BATS Options; (iv) modify the NBBO 

Setter Program, which is a program 

intended to incentivize aggressive 

quoting on BATS Options; (v) modify 

the Quoting Incentive Program, which is 

a program intended to incentivize 

sustained, aggressive quoting on BATS 

Options; and (vi) adopt fees for logical 

ports used to access BATS Options for 

order entry and receipt of market data. 

The Exchange also proposes minor 

grammatical changes to conform various 

sections of the Exchange’s Options 

Pricing section. 

(i) Grow With Us Pricing Program 

The Exchange currently has volume 

tiers in place that provide Members that 

satisfy certain volume thresholds with 

additional rebates on executions for 

which they have added liquidity to the 

BATS Options order book and reduced 

fees for executions that remove liquidity 

from the BATS Options order book. 

Further, as described below, the 

Exchange is proposing to add certain 

additional tiers to its fee schedule. The 

Exchange’s tiered pricing structure 

includes and will continue to include a 

lower tier applicable to Members with 

an average daily volume (‘‘ADV’’) 7

equal to or greater than 0.30% of 

average total consolidated volume 

(‘‘TCV’’) 8 and a second tier applicable 

to Members with an ADV equal to or 

greater than 1% of average TCV. 

Pursuant to the ‘‘Grow with Us’’ pricing 

program, the Exchange proposes to 

provide a Member with one-half of the 

economic benefit such Member would 

achieve if such Member were in the next 

highest volume tier to the extent such 

Member shows a minimum of 5 basis 

points TCV improvement over the 

Member’s previous highest monthly 

TCV on BATS Options, or ‘‘High Water 

Mark.’’ The Exchange proposes to define 

High Water Mark as the greater of a 

Member’s fourth quarter 2011 TCV or a 

Member’s best monthly TCV on BATS 

Options thereafter. For example, assume 

that for the fourth quarter of 2011, a 

Member has an ADV of 0.10% of 

average TCV. Such Member would not 

qualify for volume tier pricing 

applicable to Members with an ADV of 

0.30% of average TCV. However, if, in 

January of 2012, such Member achieves 

an average TCV of 0.15% on BATS 

Options, such Member will receive onehalf of the economic benefit such 

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Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices 2109 

9As defined in Rule 16.1, the term ‘‘Professional’’ 

means any person or entity that (i) is not a broker 

or dealer in securities, and (ii) places more than 390 

orders in listed options per day on average during 

a calendar month for its own beneficial account(s). 

10As set forth on the Exchange’s fee schedule, 

and consistent with the definition of a Customer 

order, classification as a ‘‘Firm’’ or ‘‘Market Maker’’ 

order depends on the identification by a Member 

of the applicable clearing range at the OCC. 

11An 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. 

Member would receive if the Member 

had reached the 0.30% TCV volume tier 

and the Member’s new High Water Mark 

will now be 0.15%. The applicability of 

the Grow with Us pricing program is 

explained in further detail below. 

(ii) Fees to Remove Liquidity 

The Exchange currently charges $0.42 

per contract for Professional,9 Firm and 

Market Maker 10 orders that remove 

liquidity from the BATS Options order 

book. The Exchange proposes to raise 

the fee to $0.44 per contract for 

Professional, Firm and Market Maker 

orders that remove liquidity from the 

BATS Options order book. 

With respect to Customer orders, the 

Exchange currently charges standard 

fees of $0.30 per contract for Customer 

orders that remove liquidity from BATS 

Options, subject to potential reduction 

for any Member with an ADV of 0.30% 

or more of average TCV on BATS 

Options, as described below. Pursuant 

to the Exchange’s tiered pricing 

structure Members can realize lower 

liquidity removal fees if such Members 

have an ADV equal to or greater than 

0.30% of average TCV. For Members 

reaching this volume threshold, the 

Exchange currently charges a fee of 

$0.27 per contract for Customer orders 

that remove liquidity from BATS 

Options. 

The Exchange proposes to increase 

the standard fees for Customer orders 

that remove liquidity from BATS 

Options and expand the tiered pricing 

structure applicable to Customer orders 

by adding another level at which 

Customer orders will be subject to a 

discounted liquidity fee. First, the 

Exchange proposes to increase the 

standard fee to remove liquidity for 

Customer orders to $0.44 per contract, 

which is the same fee the Exchange 

proposes to assess for Professional, Firm 

and Market Maker orders. Second, the 

Exchange proposes to increase the 

charge per contract for a Customer order 

that removes liquidity from the BATS 

Options order book where the Member 

has an ADV equal to or greater than 

0.30% of average TCV from $0.27 per 

contract to $0.36 per contract. Third, the 

Exchange proposes to introduce a new 

volume tier applicable to Members with 

an ADV equal to or greater than 1% 

average TCV. As proposed, such 

Members will be charged $0.28 per 

contract for Customer orders that 

remove liquidity from the BATS 

Options order book. 

Finally, the Exchange proposes to 

apply its Grow with Us pricing program, 

as described above, to Customer orders 

that remove liquidity. Accordingly, a 

Member that does not qualify for the 

lower tier applicable to Members with 

an ADV equal to or greater than 0.30% 

of average TCV but achieves at least a 

5 basis point increase over its previous 

High Water Mark will be assessed a fee 

of $0.40 per contract for Customer 

orders that remove liquidity from BATS 

Options (i.e., half way between the 

standard fee of $0.44 per contract and 

the fee of $0.36 charged to Members that 

reach the 0.30% TCV tier). Similarly, a 

Member that qualifies for the lower tier 

applicable to Members with an ADV 

equal to or greater than 0.30% of 

average TCV but not the 1% of average 

TCV tier that achieves at least a 5 basis 

point increase over its previous High 

Water Mark will be assessed a fee of 

$0.32 per contract for Customer orders 

that remove liquidity from BATS 

Options (i.e., half way between the 

$0.36 per contract charged to Members 

that reach the 0.30% TCV tier and the 

$0.28 per contract charged to Members 

that reach the 1% TCV tier). 

(iii) Customer Rebates for Adding 

Liquidity 

The Exchange currently provides a 

rebate of $0.30 per contract for 

Customer orders that add liquidity to 

the BATS Options order book. The 

Exchange proposes to maintain this 

standard rebate but to begin to provide 

increased rebates to Members pursuant 

to volume thresholds analogous to those 

applied to fees for removing liquidity. 

First, the Exchange proposes to adopt a 

volume tier applicable to Members with 

an ADV equal to or greater than 0.30% 

of average TCV, for which the Exchange 

will provide a rebate of $0.40 per 

contract for Customer orders that add 

liquidity to the BATS Options order 

book. Second, [sic] Exchange proposes 

to adopt a volume tier applicable to 

Members with an ADV equal to or 

greater than 1% of average TCV, for 

which the Exchange will provide a 

rebate of $0.42 per contract for 

Customer orders that add liquidity to 

the BATS Options order book. Finally, 

the Exchange proposes to apply its 

Grow with Us pricing program to 

Customer orders that add liquidity. 

Accordingly, a Member that does not 

qualify for the lower tier applicable to 

Members with an ADV equal to or 

greater than 0.30% of average TCV but 

achieves at least a 5 basis point increase 

over its previous High Water Mark will 

be provided a rebate of $0.35 per 

contract for Customer orders that add 

liquidity to BATS Options (i.e., half way 

between the standard rebate of $0.30 per 

contract and the rebate of $0.40 per 

contract provided to Members that reach 

the 0.30% TCV tier). Similarly, a 

Member that qualifies for the lower tier 

applicable to Members with an ADV 

equal to or greater than 0.30% of 

average TCV but not the 1% of average 

TCV tier that achieves at least a 5 basis 

point increase over its previous High 

Water Mark will be provided a rebate of 

$0.41 per contract for Customer orders 

that add liquidity to BATS Options (i.e., 

half way between the $0.40 per contract 

provided to Members that reach the 

0.30% TCV tier and the $0.42 per 

contract provided to Members that reach 

the 1% TCV tier). 

The Exchange is not proposing to 

modify the rebates provided for 

Professional, Firm and Market Maker 

orders, other than to move such rebates 

on the fee schedule to clearly delineate 

from the rebates applicable to Customer 

orders. 

(iv) Modification to NBBO Setter 

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’’),11

subject to certain volume requirements. 

The Exchange currently provides an 

additional $0.06 per contract rebate for 

executions that qualify for the NBBO 

Setter Rebate by Members with an ADV 

equal to or greater than 0.30% of 

average TCV but less than 1% of average 

TCV and an additional $0.10 per 

contract for qualifying executions by 

Members with an ADV equal to or 

greater than 1% of TCV. Given the 

changes proposed for Customer rebates, 

as described above, the Exchange 

proposes to modify the NBBO Setter 

Rebate such that it is only applicable to 

Professional, Firm and Market Maker 

orders. As currently in place, the NBBO 

Setter Rebate is available only to 

Members that reach one of the 

Exchange’s volume tiers. Because, as 

proposed, such Members will receive 

enhanced rebates on all Customer 

orders, and not just orders that set a new 

national best bid or offer, the Exchange 

proposes to apply the program only to 

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2110 Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices 

Professional, Firm and Market Maker 

orders. 

The Exchange also proposes to apply 

its Grow with Us pricing program to the 

NBBO Setter Rebate. Accordingly, a 

Member that does not qualify for NBBO 

Setter Rebates applicable to Members 

with an ADV equal to or greater than 

0.30% of average TCV but achieves at 

least a 5 basis point increase over its 

previous High Water Mark will receive 

NBBO Setter Rebates of $0.03 per 

contract for qualifying executions (i.e., 

half of the NBBO Setter Rebate of $0.06 

per contract provided to Members that 

reach the 0.30% TCV tier). Similarly, a 

Member that qualifies for the lower tier 

applicable to Members with an ADV 

equal to or greater than 0.30% of 

average TCV but not the 1% of average 

TCV tier that achieves at least a 5 basis 

point increase over its previous High 

Water Mark will be provided a NBBO 

Setter Rebate of $0.08 per contract for 

qualifying executions (i.e., half way 

between the $0.06 per contract provided 

to Members that reach the 0.30% TCV 

tier and the $0.10 per contract provided 

to Members that reach the 1% TCV tier). 

(v) Modification to Quoting Incentive 

Program 

BATS Options offers a Quoting 

Incentive Program (‘‘QIP’’), through 

which Members receive a rebate of 

$0.05 per contract, in addition to any 

other applicable liquidity rebate, for 

executions subject to the QIP. To qualify 

for the QIP a BATS Options Market 

Maker must be at the NBB or NBO 60% 

of the time for series trading between 

$0.03 and $5.00 for the front three (3) 

expiration months in that underlying 

during the current trading month. A 

Member not registered as a BATS 

Options Market Maker can also qualify 

for the QIP by quoting at the NBB or 

NBO 70% of the time in the same series. 

Given the enhancement to Customer 

rebates described above, the Exchange 

proposes to modify the QIP to 

differentiate between QIP rebates 

provided for Customer orders and 

Professional, Firm and Market Maker 

orders. Specifically, as proposed, 

qualifying Customer order executions in 

products subject to the QIP will receive 

an additional rebate of $0.03 per 

contract. The Exchange proposes to 

maintain the rebate of $0.05 per 

contract, in addition to any other 

applicable liquidity rebate, for 

executions subject to the QIP of 

Professional, Firm and Market Maker 

orders. 

All other aspects of the QIP currently 

in place will remain the same. As is true 

under the current operation of the QIP, 

the Exchange will determine whether a 

Member qualifies for QIP rebates at the 

end of each month by looking back at 

each Member’s (including BATS 

Options Market Makers) quoting 

statistics during that month. If at the 

end of the month a Market Maker meets 

the 60% criteria or a Member that is not 

registered as a Market Maker meets the 

70% criteria, the Exchange will provide 

the additional rebate for all executions 

subject to the QIP executed by that 

Member during that month. The 

Exchange will provide Members with a 

report on a daily basis with quoting 

statistics so such Members can 

determine whether or not they are 

meeting the QIP criteria. The Exchange 

is not proposing to impose any ADV 

requirements in order to qualify for the 

QIP at this time. 

(vi) Logical Port Fees 

The Exchange currently charges a fee 

of $400.00 per month per logical port 

used by Members or non-members to 

access and receive information from the 

Exchange’s equities platform. A logical 

port is also commonly referred to as a 

TCP/IP port, and represents a port 

established by the Exchange within the 

Exchange’s system for trading and 

billing purposes. Each logical port 

established is specific to a Member or 

non-member and grants that Member or 

non-member the ability to operate a 

specific application, such as FIX order 

entry or Multicast PITCH data receipt. 

In contrast to its equities platform, 

with the exception of logical ports with 

bulk-quoting capabilities, as further 

described below, the Exchange currently 

provides logical ports free of charge to 

Members and non-members that have 

access to or receive data from BATS 

Options. The Exchange proposes to 

begin charging a monthly fee for logical 

ports used to enter orders in the 

Exchange’s trading system for BATS 

Options and to receive BATS Options 

data from the Exchange. The Exchange 

proposes to charge $400.00 per month of 

any port type other than a Multicast 

PITCH Spin Server Port, GRP Port or 

logical port with bulk-quoting 

capabilities. Similar to its provision of 

ports applicable to the Exchange’s 

equities platform, the Exchange 

proposes to provide all Exchange 

constituents that receive the Exchange’s 

Multicast PITCH Feed with 32 free 

Multicast PITCH Spin Server Ports free 

of charge and, if such ports are used, 

one free GRP Port. The Exchange 

proposes to charge such customers 

$400.00 per month per additional GRP 

Port or additional set of 32 Multicast 

PITCH Spin Server Ports. The 

Exchange’s proposal to provide certain 

ports free of charge to Multicast Pitch 

customers is designed to encourage use 

of the Exchange’s Multicast PITCH Feed 

because the Exchange believes that the 

feed is its most efficient feed, and thus, 

will reduce infrastructure costs for both 

the Exchange and those who utilize the 

feed. Any Member or non-member that 

has entered into the appropriate 

agreements with the Exchange is 

permitted to receive Multicast Pitch 

Spin Server Ports and GRP Ports from 

the Exchange. 

The Exchange recently began offering 

logical ports with bulk-quoting 

capabilities, for which the Exchange 

charges Members $1,000.00 per month. 

The bulk-quoting interface allows Users 

to provide both a bid and an offer in one 

message as well as bundle several quote 

updates into one bulk message. This is 

a useful feature for Users that provide 

quotations in many different options. In 

order to encourage participation in the 

QIP program and the usage of bulkquoting ports, which the Exchange 

believes provide Users and the 

Exchange with operational efficiencies, 

the Exchange proposes to waive fees for 

logical ports with bulk-quoting 

capabilities for any Member that 

satisfies the criteria of the QIP program 

in more than 25 underlying securities. 

Based on the proposal, the change 

applies to Members that obtain ports for 

direct access to the Exchange, nonmember service bureaus that act as a 

conduit for orders entered by Exchange 

Members that are their customers, and 

market data recipients. Other than 

logical ports with bulk-quoting 

capabilities, the Exchange has 

previously provided ports free of charge 

to all Members and non-members that 

use such ports for order entry to BATS 

Options or for receipt of BATS Options 

market data. However, over time, the 

Exchange’s infrastructure costs have 

continued to increase. In addition, the 

Exchange believes that providing BATS 

Options logical ports free of charge has 

not encouraged Members and nonmembers to reserve and maintain ports 

efficiently, but rather, has led to a 

significant number of ports that are 

reserved and enabled by such market 

participants but are never used or are 

under used. Accordingly, the Exchange 

believes that the imposition of port fees 

will help the Exchange to continue to 

maintain and improve its infrastructure, 

while also encouraging Exchange 

customers to request and enable only 

the ports that are necessary for their 

operations related to the Exchange. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

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Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices 2111 

12 15 U.S.C. 78f. 

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

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6 of the Act.12

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Section 6(b)(4) of the Act,13 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 Exchange believes that providing 

additional financial incentives to 

Members that demonstrate a 5 basis 

point increase over their previous High 

Water Mark offers an additional, flexible 

way to achieve financial incentives from 

the Exchange and encourages Members 

to add increasing amounts of liquidity 

to BATS Options each month. The Grow 

with Us pricing program thereby 

rewards a Member’s growth patterns. 

Such increased volume increases 

potential revenue to the Exchange, and 

will allow the Exchange to continue to 

provide and potentially expand the 

incentive programs operated by the 

Exchange. The increased liquidity also 

benefits all investors by deepening the 

BATS Options 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 Grow with Us 

program is also fair and equitable in that 

it is available to all Members and will 

expand the applicability of the 

Exchange’s tiered pricing structure, 

even for Members that do not meet the 

Exchange’s volume-based tiers. 

Volume-based rebates such as the 

ones proposed herein have been widely 

adopted in the cash equities markets, 

and are equitable 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/or 

growth patterns, and introduction of 

higher volumes of orders into the price 

and volume discovery processes. 

Accordingly, the Exchange believes that 

the proposal is not unfairly 

discriminatory because it is consistent 

with the overall goals of enhancing 

market quality. Similarly, the Exchange 

believes that continuing to base its 

tiered fee structure and NBBO Setter 

Program based on overall TCV, rather 

than a static number of contracts 

irrespective of overall volume in the 

options industry, is a fair and equitable 

approach to pricing. 

Despite the increases in fees for all 

orders that remove liquidity (Customer, 

Professional, Firm and Market Maker 

orders), the Exchange believes that its 

proposed fee structure is fair and 

equitable as the Exchange’s standard 

fees generally still remain equivalent to 

or slightly lower than standard fees 

charged by other markets with similar 

fee structures, such as NYSE Arca and 

Nasdaq. Further, the Exchange believes 

that the various programs offered by the 

Exchange to receive reduced fees and 

enhanced rebates provide all Members 

with several different ways to offset the 

increase in fees or receive a reduction in 

fees. Further, with respect to the 

increase to Customer fees to remove 

liquidity, the Exchange has expanded its 

rebate structure to provide Customer 

orders with enhanced rebates, subject to 

the volume tier structure and the Grow 

with Us pricing program. As noted 

above, the Exchange believes that such 

volume-based tiers are fair and equitable 

and not unreasonably discriminatory 

because they are consistent with the 

overall goals of enhancing market 

quality. 

Furthermore, the Exchange believes 

that the modification of the NBBO Setter 

Rebate program, to eliminate the 

applicability of such program for 

Customer orders, is fair and equitable 

and not unreasonably discriminatory 

because Customer orders from Members 

that reach at least the 0.30% TCV tier 

can achieve higher rebates than they 

would under the current pricing 

structure of a standard rebate of $0.30 

per contract plus either $0.06 or $0.10 

per contract. In addition, such higher 

rebates will be available on every order, 

and not just on orders that set a new 

national best bid or national best offer. 

Also due to the increased levels of 

rebates for Customer orders, the 

Exchange believes that the proposed 

modification to the Quoting Incentive 

Program is fair and equitable and not 

unreasonably discriminatory. Although 

the proposed QIP rebate for qualifying 

Customer orders is slightly lower than is 

currently offered and will be slightly 

lower than the QIP rebate provided to 

Professional, Firm and Market Maker 

orders, the Exchange believes that this 

distinction is reasonable and not 

unreasonably discriminatory because of 

the significant increase to rebates on 

Customer orders. The Exchange also 

believes that continuing to maintain a 

slightly lower threshold for meeting the 

QIP for registered BATS Options Market 

Makers appropriately incentivizes 

Members of BATS Options to register 

with the Exchange as Options Market 

Makers. While the Exchange does wish 

to allow participation in the QIP by all 

Members, the Exchange believes that 

registration by additional Members as 

Market Makers will help to continue to 

increase the breadth and depth of 

quotations available on the Exchange. 

The Exchange notes that in addition to 

the fact that the QIP is available to all 

Members, the proposal is not unfairly 

discriminatory despite a slightly higher 

quotation requirement for non-Market 

Makers due to the fact that registration 

as a BATS Options Market Maker is 

equally available to all Members. 

The Exchange believes that its 

proposed logical port fees are reasonable 

in light of the benefits to Members of 

direct market access and receipt of data, 

which data, other than the proposed 

logical port fee, is currently provided 

free of charge. In addition, the Exchange 

believes that its fees are equitably 

allocated among its constituents based 

upon the number of access ports that 

they require to submit orders to the 

Exchange or receive data from the 

Exchange. The Exchange believes that 

its fees for access services will enable it 

to better cover its infrastructure costs 

and to improve its market technology 

and services. The Exchange also 

believes that providing financial 

incentives to use Exchange technology 

that the Exchange believes is the most 

technologically efficient for the 

Exchange and its constituents is a fair 

and equitable approach to pricing. 

Accordingly, the Exchange believes that 

promotion of its Multicast PITCH data 

feed through the offering of free logical 

ports as well as the waiver of bulkquoting logical port fees for Members 

that achieve QIP thresholds in more 

than 25 underlying securities are fair 

and equitable. Participation in the QIP 

is available to all Members, and as such, 

all Members have the ability to qualify 

for free bulk-quoting ports. Based on the 

foregoing, the Exchange believes that 

the proposed pricing structure for 

logical ports is not unreasonably 

discriminatory. 

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. 

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2112 Federal Register / Vol. 77, No. 9 / Friday, January 13, 2012 / Notices 

14 15 U.S.C. 78s(b)(3)(A)(ii). 

15 17 CFR 240.19b–4(f)(2). 

16 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54422 

(September 11, 2006), 71 FR 54537 (September 15, 

2006) approving SR–CBOE–2004–21. 

4See Securities Exchange Act Release No. 55392 

(March 2, 2007), 72 FR 10572 (March 8, 2007) 

approving SR–CBOE–2006–112. 

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 14 and Rule 19b–4(f)(2) 

thereunder,15 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 email to rulecomments@sec.gov. Please include File 

Number SR–BATS–2011–053 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–2011–053. 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 

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– 

2011–053 and should be submitted on 

or before February 3, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–528 Filed 1–12–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66119; File No. SR–CBOE– 

2011–126] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Relating to the 

CBOE Stock Exchange Request for 

Quote Rules 

January 9, 2012. 

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 December 

27, 2011, the Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. 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 to amend its 

rules relating to requests for quotes on 

the CBOE Stock Exchange (‘‘CBSX’’). 

The text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.com/AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission. 

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 

self-regulatory organization 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 self-regulatory organization has 

prepared summaries, set forth in 

sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

CBSX is a stock-trading facility of 

CBOE. Prior to the establishment of 

CBSX, CBOE adopted trading rules in 

Chapters 50–54 for the purely electronic 

trading of non-option securities.3 Those 

rules, which were based, to an extent, 

on CBOE’s screen-based trading rules in 

Chapters 40–46, contemplated the use of 

request-for-quote messages (RFQs). 

Chapters 50–54 were subsequently 

modified in connection with the 

introduction of CBSX.4 The provisions 

related to RFQs were not materially 

changed at that time. RFQ messages are 

generally intended to prompt marketmakers in a given security to respond 

with a quote. RFQs are generally 

beneficial when seeking liquidity for a 

security in which a quote does not exist. 

The purpose of this filing is to delete 

Rule 50.1 regarding the definition of 

RFQ, Rule 52.9 regarding RFQ 

processing, and references to RFQs in 

Rule 53.23 regarding CBSX Remote 

Market-Maker obligations. There are two 

reasons behind the Exchange’s desire to 

eliminate RFQs on CBSX: (1) Because 

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