Federal Register / Vol. 80, No. 15 / Friday, January 23, 2015 / Notices 3679 

46 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange. A Member will 

have the status of a ‘‘member’’ of the Exchange as 

that term is defined in Section 3(a)(3) of the Act.’’ 

See Exchange Rule 1.5(n). 

4See Securities Exchange Act Release No. 72685 

(July 28, 2014), 79 FR 44889 (August 1, 2014) (SR– 

BATS–2014–029). Other national securities 

exchange filed similar proposals. See, e.g., 

Securities Exchange Act Release Nos. 72710 (July 

29, 2014), 79 FR 45511 (August 5, 2014) (SR– 

NYSE–2014–38), and 72684 (July 28, 2014), 79 

FR44956 (August 1, 2014) (SR–NASDAQ–2014– 

072). 

5The Exchange understands that other national 

security exchanges will file similar proposed rule 

changes with the Commission to further describe 

their use of data feeds for order handling and 

execution, order routing, and regulatory 

compliance. 

6See Mary Jo White, Chair, Securities and 

Exchange Commission, Speech at Sandler O’Neill & 

Partners L.P. Global Exchange and Brokerage 

Conference (June 5, 2014). 

7See letter from Stephen Luparello, Director, 

Division of Trading and Markets, Securities and 

Exchange Commission, to Joe Ratterman, Chief 

Executive Officer, BATS Global Markets, Inc., dated 

June 20, 2014. 

8See supra note 6. 

9See supra note 7. 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–EDGA–2015–02. 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 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–EDGA– 

2015–02 and should be submitted on or 

before February 13, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01065 Filed 1–22–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74074; File No. SR–BATS– 

2015–04] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Clarify the Use of 

Certain Data Feeds 

January 15, 2015. 

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 January 

7, 2015, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. 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 filed a proposal to 

clarify for Members 3 and non-Members 

the Exchange’s use of certain data feeds 

for order handling and execution, order 

routing, and regulatory compliance. On 

July 15, 2014, the Exchange filed a 

proposed rule change that described its 

use of data feeds for order handling and 

execution, order routing, and regulatory 

compliance (the ‘‘Initial Proposal’’) with 

the Securities and Exchange 

Commission (the ‘‘Commission’’).4 The 

Exchange submits this supplemental 

filing in order to further clarify for 

Members and non-Members the 

Exchange’s use of certain data feeds and 

to make one modification with respect 

to the usage of such data feeds as 

previously described.5

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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

On June 5, 2014, Chair White 

requested that all national securities 

exchanges develop proposed rule 

changes to disclose their use of data 

feeds to execute and route orders and 

comply with regulatory requirements.6

In addition, on June 20, 2014, the 

Commission’s Division of Trading and 

Markets requested that the Exchange file 

proposed rule changes that disclose its 

usage of particular market data feeds, 

among other things.7 In response to 

these requests, the Exchange filed the 

Initial Proposal with the Commission on 

July 15, 2014.8 The Exchange submits 

this supplemental filing to further 

clarify for Members and non-Members 

the Exchange’s use of certain data feeds 

for order handling and execution, order 

routing, and regulatory compliance.9 In 

addition, the Exchange proposes to 

modify the way that it constructs the 

Pegged NBBO, as further described 

below. To ensure proper context and a 

complete filing describing the 

Exchange’s procedures in this area, the 

Exchange has repeated all relevant 

information from the Initial Proposal 

and supplemented such information as 

necessary. 

Order Handling and Execution 

In order to calculate the national best 

bid and offer (‘‘NBBO’’) in its Matching 

Engine (the ‘‘ME’’), the Exchange uses 

quotes disseminated by market centers 

through proprietary data feeds 

(generally referred to as ‘‘Direct Feeds’’) 

as well as by the Securities Information 

Processors (‘‘SIP’’). The ME uses quotes 

disseminated from SIP feeds for the 

Chicago Stock Exchange, Inc., NYSE 

MKT LLC and the Financial Industry 

Regulatory Authority’s Alternative 

Display Facility. The ME consumes the 


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10See Exchange Rule 1.5(e). 

11Pursuant to Regulation NMS, a broker-dealer 

routing a Day ISO is required to simultaneously 

route one or more additional ISOs, as necessary, to 

execute against the full displayed size of any 

protected quote priced equal to or better than the 

Day ISO. See also Question 5.02 in the ‘‘Division 

of Trading and Markets, Responses to Frequently 

Asked Questions Concerning Rule 611 and Rule 610 

of Regulation NMS’’ (last updated April 4, 2008) 

available at http://www.sec.gov/divisions/

marketreg/nmsfaq610-11.htm. 

12As set forth in Rule 11.13(a)(3), the term 

‘‘System routing table’’ refers to the proprietary 

process for determining the specific trading venues 

to which the System routes orders and the order in 

which it routes them. 

13See Exchange Rule 11.9(c)(8). 

14See Exchange Rule 11.9(c)(9). 

15See Exchange Rule 11.9(c)(16). 

16See Exchange Rule 11.9(c)(19). 

17See Securities Exchange Act Release No. 71375 

(January 23, 2014), 79 FR 4771 (January 29, 2014) 

(SR–BATS–2013–059; SR–BYX–2013–039). 

18See Securities Exchange Act Release Nos. 

72682 (July 28, 2014), 79 FR 44938 (August 1, 2014) 

(SR–EDGA–2014–17); 72683 (July 28, 2014), 79 FR 

44950 (August 1, 2014) (SR–EDGX–2014–20). 

19The ME and RE consume the same Direct Feeds 

and SIP feeds. 

Direct Feeds from every other protected 

venue, including the Exchange’s 

affiliates, BATS Y-Exchange, Inc. 

(‘‘BYX’’), EDGA Exchange, Inc. 

(‘‘EDGA’’), and EDGX Exchange, Inc. 

(‘‘EDGX’’). 

The ME will include odd lot 

quotations in its calculation of the 

NBBO depending on the source of the 

quotation. Where a protected market 

center aggregates odd lot quotations at a 

single price level into round lot 

quotations and publishes such 

aggregated quotations to the SIPs, then 

the ME will include those odd lot 

quotations in its calculation of the 

NBBO. In addition, where a protected 

market center aggregates odd lot 

quotations across more than one price 

level and publishes such aggregated 

quotations to the SIPs, then the ME will 

include those odd lot quotations in its 

calculation of the NBBO. 

In addition to receiving Direct Feeds 

and SIP feeds, the ME’s calculation of 

the NBBO may be adjusted based on 

orders sent to other venues with 

protected quotations, execution reports 

received from those venues, and certain 

orders received by the Exchange 

(collectively ‘‘Feedback’’). The 

Exchange does not include its quotes in 

the calculation of the Exchange’s NBBO 

because the system is designed such 

that all incoming orders are separately 

compared to the Exchange’s Best Bid or 

Offer and the Exchange calculated 

NBBO, which together create a complete 

view of the NBBO, prior to display, 

execution, or routing. 

Feedback from the receipt of 

Intermarket Sweep Orders (‘‘ISOs’’) with 

a time-in-force of Day (‘‘Day ISOs’’) and 

feedback from the Exchange’s routing 

broker/dealer, BATS Trading, Inc., 

(‘‘BATS Trading’’), defined respectively 

as ‘‘Day ISO Feedback’’ and ‘‘Router 

Feedback,’’ are used to augment the 

market data received by Direct Feeds 

and the SIP feeds as further described 

below. The Exchange’s ME will update 

the NBBO upon receipt of a Day ISO. 

When a Day ISO is posted on the BATS 

Book,10 the ME uses the receipt of a Day 

ISO as evidence that the protected 

quotes have been cleared, and the ME 

does not check away markets for equal 

or better-priced protected quotes.11 The 

ME will then display and execute nonISO orders at the same price as the Day 

ISO. 

All Feedback expires as soon as: (i) 

One (1) second passes; (ii) the Exchange 

receives new quote information; or (iii) 

the Exchange receives updated 

Feedback information. With the 

exception of Day ISO Feedback, the 

Exchange currently generates Feedback 

where an order was routed using a 

routing strategy offered by the Exchange 

that accesses protected quotes of trading 

venues on the System routing table 

(‘‘Smart Order Routing’’).12

The Exchange currently determines 

the price at which a Pegged Order,13

Mid-Point Peg Order,14 Market Maker 

Peg Order,15 or Supplemental Peg 

Order 16 is to be pegged based on the 

Pegged NBBO (‘‘PBBO’’). The 

Exchange’s Matching Engine calculates 

the PBBO using the Exchange’s quotes 

from the SIP feeds, and quotes 

disseminated from the same Direct 

Feeds, SIP feeds, and Feedback used by 

the ME for its NBBO calculation. As 

noted above, the Exchange does not 

otherwise utilize quotations from its 

local book in calculating the NBBO, and 

thus, the quotation from the SIP has 

been necessary for pegged orders in 

order to generate a view of the 

Exchange’s quotations. 

Earlier this year, the Exchange and its 

affiliate, BYX, received approval to 

effect a merger (the ‘‘Merger’’) of the 

Exchange’s parent company, BATS 

Global Markets, Inc., with Direct Edge 

Holdings LLC, the indirect parent of 

EDGA and EDGX (the Exchange, 

together with BYX, EDGA and EDGX, 

the ‘‘BGM Affiliated Exchanges’’).17 In 

the context of the Merger, the BGM 

Affiliated Exchanges are working to 

align certain system functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

As previously described by EDGA and 

EDGX,18 in addition to information 

regarding other markets’ quotes such 

exchanges currently construct an NBBO 

for purposes of pegged orders using 

information regarding orders on the 

applicable exchange’s local order book 

(i.e., EDGA constructs a pegged NBBO 

using information regarding orders on 

the EDGA order book and EDGX 

constructs a pegged NBBO using 

information regarding orders on the 

EDGX order book). In connection with 

the technology integration the Exchange 

similarly proposes to use information 

regarding orders displayed on the BATS 

Book in addition to quotes disseminated 

from Direct Feeds, SIP Feeds, and 

Feedback in order to construct the 

PBBO. Thus, as proposed, the Exchange 

would no longer use the Exchange’s 

quotes from the SIP feeds in order to 

construct the PBBO. 

Order Routing 

When the Exchange has a marketable 

order with instructions from the sender 

that the order is eligible to be routed, 

and the ME identifies that there is no 

matching price available on the 

Exchange, but there is a matching price 

represented at another venue that 

displays protected quotes, then the ME 

will send the order to the Routing 

Engine (‘‘RE’’) of BATS Trading. 

In determining whether to route an 

order and to which venue(s) it should be 

routed, the RE makes its own 

calculation of the NBBO using the 

Direct Feeds, SIP feeds, and Router 

Feedback, as described below.19 The RE 

will include odd lot quotations in its 

calculation of the NBBO depending on 

the source of the quotation. Where a 

protected market center aggregates odd 

lot quotations at a single price level into 

round lot quotations and publishes such 

aggregated quotations to the SIPs, then 

the RE will include those odd lot 

quotations in its calculation of the 

NBBO. 

The RE does not utilize Day ISO 

Feedback in constructing the NBBO; 

however, because all orders initially 

flow through the ME, to the extent Day 

ISO Feedback has updated the ME’s 

calculation of the NBBO, all orders 

processed by the RE do take Day ISO 

Feedback into account. The RE receives 

Feedback from all Smart Order Routing 

strategies. 

There are three types of Router 

Feedback that contribute to the 

Exchange’s calculation of the NBBO: 

• Immediate Feedback. Where BATS 

Trading routes an order to a venue with 

a protected quotation using Smart Order 

Routing (a ‘‘Feedback Order’’), the 

number of shares available at that venue 

is immediately decreased by the number 

of shares routed to the venue at the 

applicable price level. 


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Federal Register / Vol. 80, No. 15 / Friday, January 23, 2015 / Notices 3681 

20See Rule 11.9(g). 

21See supra note 13. 

22See supra note 13. 

23See also Question 5.03 in the ‘‘Division of 

Trading and Markets, Responses to Frequently 

Asked Questions Concerning Rule 611 and Rule 610 

of Regulation NMS’’ (last updated April 4, 2008) 

available at http://www.sec.gov/divisions/

marketreg/nmsfaq610-11.htm. 

24See Exchange Rule 11.19. 

25 17 CFR 242.200(g); 17 CFR 242.201. On 

February 26, 2010, the Commission adopted 

amendments to Regulation SHO under the Act in 

the form of Rule 201, pursuant to which, among 

other things, short sale orders in covered securities 

generally cannot be executed or displayed by a 

trading center, such as the Exchange, at a price that 

is at or below the current NBB when a Short Sale 

Circuit Breaker is in effect for the covered security. 

See Securities Exchange Act Release No. 61595 

(February 26, 2010), 75 FR 11232 (March 10, 2010). 

In connection with the adoption of Rule 201, Rule 

200(g) of Regulation SHO was also amended to 

include a ‘‘short exempt’’ marking requirement. See 

also Securities Exchange Act Release No. 63247 

(November 4, 2010), 75 FR 68702 (November 9, 

2010) (extending the compliance date for Rules 201 

and 200(g) to February 28, 2011). See also Division 

of Trading & Markets: Responses to Frequently 

Asked Questions Concerning Rule 201 of 

Regulation SHO, www.sec.gov/divisions/marketreg/ 

rule201faq.htm. 

26 15 U.S.C. 78f(b). 

27 15 U.S.C. 78f(b)(5). 

• Execution Feedback. Where BATS 

Trading receives an execution report 

associated with a Feedback Order that 

indicates that the order has fully 

executed with no remaining shares 

associated with the order, all opposite 

side quotes on the venue’s order book 

that are priced more aggressively than 

the price at which the order was 

executed will be ignored. 

• Cancellation Feedback. Where 

BATS Trading receives an execution 

report associated with a Feedback Order 

that indicates that the order has not 

fully executed (either a partial execution 

or a cancellation), all opposite side 

quotes on the venue’s order book that 

are priced equal to or more aggressively 

than the limit price for the order will be 

ignored. 

All Feedback expires as soon as: (i) 

One (1) second passes; (ii) the Exchange 

receives new quote information; or (iii) 

the Exchange receives updated 

Feedback information. 

Regulatory Compliance 

Locked or Crossed Markets. The ME 

determines whether the display of an 

order would lock or cross the market. At 

the time an order is entered into the ME, 

the ME will establish, based upon its 

calculation of the NBBO from Direct 

Feeds, SIP feeds and Feedback, whether 

the order will lock or cross the 

prevailing NBBO for a security. In the 

event that the order would produce a 

locking or crossing condition, the ME 

will cancel the order, re-price 20 the 

order, or route the order based on the 

Member’s instructions. Two exceptions 

to this logic are Day ISOs and 

declarations of self-help. 

Pursuant to Regulation NMS, when an 

Exchange receives a Day ISO, the sender 

of the ISO retains the responsibility to 

comply with applicable rules relating to 

locked and crossed markets.21 In such 

case, the Exchange is obligated only to 

display a Day ISO order at the Member’s 

price, even if such price would lock or 

cross the market.22

Declarations of self-help occur when 

the RE detects that an exchange 

displaying protected quotes is slow, as 

defined in Regulation NMS, or nonresponsive to the Exchange’s routed 

orders. In this circumstance, according 

to Rule 611(b) of Regulation NMS, the 

Exchange may display a quotation that 

may lock or cross the market that the 

Exchange invoked self-help against. 23

The Exchange may also declare self-help 

where another exchange’s SIP quotes are 

slow or non-responsive resulting in a 

locked or crossed market. Once the 

Exchange declares self-help, the ME and 

RE will ignore the quotes generated 

from the self-helped market in their 

calculations of the NBBO for execution 

and routing determinations in 

compliance with Regulation NMS. The 

Exchange will also disable all routing to 

the self-helped market. The ME and RE 

will continue to consume the selfhelped market center’s quotes; however, 

in order to immediately include the 

quote in the NBBO calculation and 

enable routing once self-help is revoked. 

Trade-Through Rule. Pursuant to Rule 

611 of Regulation NMS, the Exchange 

shall establish, maintain, and enforce 

written policies and procedures that are 

reasonably designed to prevent tradethroughs on trading centers of protected 

quotations in NMS stocks that do not 

fall within a valid exception and, if 

relying on such an exception, that are 

reasonably designed to ensure 

compliance with the terms of the 

exception. The ME does not permit an 

execution on the Exchange if there are 

better-priced protected quotations 

displayed in the market unless the order 

is an ISO. At the time an order is 

entered into the ME, the ME uses the 

view of the NBBO as described above. 

If the NBBO is priced better than what 

is resident on the Exchange, the 

Exchange does not match such order on 

the BATS Book, and based on the 

Member’s instructions, the ME cancels 

the order, re-prices the order or routes 

the order. 

Regulation SHO. The Exchange 

cannot execute a Short Sale Order 24

equal to or below the current National 

Best Bid (‘‘NBB’’) when a short sale 

price restriction is in effect pursuant to 

Rule 201 of Regulation SHO (‘‘Short 

Sale Circuit Breaker’’).25 When a Short 

Sale Circuit Breaker is in effect, the 

Exchange utilizes information received 

from Direct Feeds, SIP feeds, and 

Feedback, and a view of the BATS Book 

to assess its compliance with Rule 201 

of Regulation SHO. The primary 

difference between the NBBO used for 

compliance with Rule 201 of Regulation 

SHO and other constructions of the 

NBBO, however, is that the Exchange 

includes market centers against which it 

has declared self-help in its view of the 

NBBO. 

Latent or Inaccurate Direct Feeds. 

Where the Exchange’s systems detect 

problems with one or more Direct 

Feeds, the Exchange will immediately 

fail over to the SIP feed to calculate the 

NBBO for the market center(s) where the 

applicable Direct Feed is experiencing 

issues. Problems that lead to immediate 

fail over to the SIP feed may include a 

significant loss of information (i.e., 

packet loss) or identifiable latency, 

among other things. The Exchange can 

also manually fail over to the SIP feed 

in lieu of Direct Feed data upon 

identification by a market center of an 

issue with its Direct Feed(s). 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 26 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 27

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The Exchange does not 

believe that this proposal will permit 

unfair discrimination among customers, 

brokers, or dealers because it will be 

available to all Users. 

The Exchange believes that its 

proposal to describe the Exchange’s use 

of data feeds removes impediments to 

and perfects the mechanism of a free 

and open market and protects investors 

and the public interest because it 

provides additional specificity and 

transparency. The Exchange’s proposal 

will enable investors to better assess the 

quality of the Exchange’s execution and 

routing services. Other than the 

proposed modification to the 

construction of the PBBO, the proposal 

does not change the operation of the 

Exchange or its use of data feeds; rather 


tkelley on DSK3SPTVN1PROD with NOTICES
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28See Letter from R.T. Leuchtkafer to the 

Commission, dated August 22, 2014 (SR–BATS– 

2014–029) (discussing the Exchange’s market data 

feed practices). See Letter from Eric Scott Hunsader, 

Nanex, LLC, to the Commission, dated August 22, 

2014 (SR–BATS–2014–029) (discussing the 

Exchange’s use of NBBO as a defined term). See 

Letter from Donald Bollerman, Head of Market 

Operations, IEX ATS, to the Commission, dated 

September 25, 2014 (SR–BATS–2014–029) (SR– 

BYX–2014–012) (discussing the Exchange’s 

calculation of the PBBO). 

29See Letter from Suzanne Hamlet Shatto to the 

Commission, dated August 19, 2014 (SR–EDGX– 

2014–20) (discussing Dodd Frank principles). 

30 15 U.S.C. 78s(b)(3)(A). 

31 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

32 17 CFR 240.19b–4(f)(6). 

33 17 CFR 240.19b–4(f)(6)(iii). 

34For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

it describes how, and for what purposes, 

the Exchange uses the quotes 

disseminated from data feeds to 

calculate the NBBO for a security for 

purposes of Regulation NMS, Regulation 

SHO and various order types that 

update based on changes to the 

applicable NBBO. The Exchange 

believes the additional transparency 

into the operation of the Exchange as 

described in the proposal will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposal will impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. On the contrary, 

the Exchange believes the proposal 

would enhance competition because 

describing the Exchange’s use of data 

feeds enhances transparency and 

enables investors to better assess the 

quality of the Exchange’s execution and 

routing services. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange filed the Initial 

Proposal with the Commission on July 

15, 2014, and it was published for 

comment in the Federal Register on 

August 1, 2014. The Commission 

received three (3) written comment 

letters in response to the Initial 

Proposal.28 In addition, one (1) 

comment letter was submitted to the 

Commission commenting on a 

companion EDGX filing.29 The 

Exchange believes that the comments 

raised in these letters are either not 

directly related to the Exchange’s 

proposal but instead raise larger market 

structure issues or are adequately 

addressed in this proposal, particularly 

as it relates to the Commission’s request 

to describe the Exchange’s use of data 

feeds for order handling and execution, 

order routing, and regulatory 

compliance. The Exchange further notes 

that the comments received regarding 

the Exchange’s calculation of the PBBO 

are no longer applicable based on the 

proposed change described above 

related to the technology integration of 

the BGM Affiliated Exchanges. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 30 and Rule 19b–4(f)(6) 

thereunder.31

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 32 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 33

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange stated that waiver 

of the operative delay will allow the 

Exchange to immediately adopt rule text 

consistent with the Initial Proposal and 

offer certain functionality that is already 

available on EDGA and EDGX with 

respect to the use of information 

regarding orders on the applicable 

exchange’s order book to construct the 

PBBO. In addition, the Exchange stated 

that waiver of the operative delay will 

allow it to continue to move towards a 

complete technology integration of the 

BGM Affiliated Exchanges to ensure 

stability of the System. For these 

reasons, the Commission believes the 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the operative delay and 

designates the proposal operative upon 

filing.34

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

BATS–2015–04 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 

Number SR–BATS–2015–04. 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 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 15 / Friday, January 23, 2015 / Notices 3683 

35 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’), and NASDAQ OMX BX, Inc. (‘‘BX’’) are 

self-regulatory organizations (‘‘SROs’’) that are 

wholly owned subsidiaries of The NASDAQ OMX 

Group, Inc. (‘‘NASDAQ OMX’’). The Exchange, 

NOM (a facility of the Exchange), BX, BX Options 

(a facility of BX), Phlx, and PSX (a facility of Phlx) 

(together with the Exchange known as the 

‘‘NASDAQ Markets’’), are independently filing 

proposals to conform their respective Extranet 

Access Fee rules to NASDAQ Rule 7025. 

4See Securities Exchange Act Release Nos. 50483 

(October 1, 2004), 69 FR 60448 (October 8, 2004) 

(SR–NASD–2004–118) (establishing the Extranet 

Access Fee on NASDAQ); and 71199 (December 30, 

2013), 79 FR 686 (January 6, 2014) (SR–NASD [sic]– 

2013–159) (notice of filing and immediate 

effectiveness increasing the Extranet Access Fee to 

$1,000). 

5See SR–SR– [sic] NASDAQ–2015–001 [sic] 

(immediately effective filing on January 2 [sic], 

2015, establishing the Extranet Access Fee on NOM 

pursuant to Chapter XV, Section 12). 

6As noted, the NASDAQ Markets are 

independently filing proposals to conform their 

respective Extranet Access Fee. 

7The Exchange notes that while NOM Chapter 

XV, Section 12 and NASDAQ Rule 7025 each 

contain some language particular to the relevant 

exchange, with this proposal the language of the 

two rules is substantively identical. For example, 

language in Rule 7025 that refers to consolidated 

data disseminated by the UTP SIP is not reflected 

in NOM Chapter XV, Section 12, as it deals with 

options. 

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 Number SR–BATS– 

2015–04 and should be submitted on or 

before February 13, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01063 Filed 1–22–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74077; File No. SR– 

NASDAQ–2015–002] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Regarding the 

Extranet Access Fee 

January 16, 2015. 

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 January 5, 

2015, The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared by NASDAQ. 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 

NASDAQ proposes to add language to 

Rule 7025 (‘‘Extranet Access Fee’’), 

which includes a new section about the 

applicability of the Extranet Access Fee. 

This will conform the Exchange’s 

Extranet Access Fee rule to that of other 

markets. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

www.nasdaq.cchwallstreet.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. 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 purpose of the proposal is to add 

language to Rule 7025 (‘‘Extranet Access 

Fee’’), which includes a new section 

about the applicability of the Extranet 

Access Fee. This will conform the 

Exchange’s Extranet Access Fee rule to 

that of other markets.3

Specifically, the Exchange proposes 

language in Rule 7025 to indicate that 

an Extranet Access connection with 

NASDAQ pursuant to Rule 7025 on the 

equity side as well as a connection 

pursuant to Chapter XV, Section 12 on 

the options side shall be assessed a total 

monthly access fee of $1,000 per 

recipient CPE Configuration [sic] This 

proposal conforms the Extranet Access 

Fee in Rule 7025 (equities) and the 

Extranet Access Fee in NASDAQ 

Options Market (‘‘NOM’’) Chapter XV, 

Section 12 (options), as well as the other 

NASDAQ Markets. 

The Extranet Access Fee was 

introduced a decade ago on NASDAQ 

Rule 7025 as an equity fee.4 The 

Extranet Access Fee was also introduced 

on NOM.5 By this proposal, the 

Exchange normalizes the application of 

the Extranet Access Fee on NASDAQ 

and on NOM.6

As proposed, Rule 7025 will read as 

follows: ‘‘Extranet providers that 

establish a connection with Nasdaq to 

offer direct access connectivity to 

market data feeds shall be assessed a 

monthly access fee of $1,000 per 

recipient Customer Premises Equipment 

(‘‘CPE’’) Configuration. If an extranet 

provider uses multiple CPE 

Configurations to provide market data 

feeds to any recipient, the monthly fee 

shall apply to each such CPE 

Configuration. For purposes of this Rule 

7025, the term ‘‘Customer Premises 

Equipment Configuration’’ shall mean 

any line, circuit, router package, or 

other technical configuration used by an 

extranet provider to provide a direct 

access connection to Nasdaq market 

data feeds to a recipient’s site. No 

extranet access fee will be charged for 

connectivity to market data feeds 

containing only consolidated data. For 

purposes of this rule, consolidated data 

includes data disseminated by the UTP 

SIP. Extranet providers that establish a 

connection with Nasdaq pursuant to 

this Rule 7025 as well as a connection 

pursuant to Chapter XV, Section 12 

shall be assessed a total monthly access 

fee of $1,000 per recipient CPE 

Configuration.’’ The proposal conforms 

NASDAQ Rule 7025 to NOM Chapter 

XV, Section 12 and makes them 

substantively identical.7 The proposal 

also makes it clear that if an extranet 

provider establishes a connection on 

NASDSAQ [sic] (equities) as well as on 

NOM (options), the extranet provider 

will not need to pay a double $1,000 

monthly access fee per CPE, but rather 

only one total monthly access fee of 

$1,000 per CPE. 

The proposed [sic] Extranet Access 

Fee will continue to be used to help 

recoup the Exchange’s costs associated 

with maintaining multiple extranet 

connections with multiple providers. 

These costs include those associated 

with overhead and technology 

infrastructure, administrative, 

maintenance and operational costs. 

Since the inception of Extranet Access 


tkelley on DSK3SPTVN1PROD with NOTICES