Federal Register / Vol. 80, No. 52 / Wednesday, March 18, 2015 / Notices 14193 

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

16 17 CFR 240.19b–4(f). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

As such, the Exchange believes that 

increasing the difference in the rebates 

between the tiers will act to incentivize 

Members to increase their ADV as a 

percentage of TCV to 0.30% in order to 

qualify for Customer Add Volume Tier 

2 and receive a rebate of $0.48 per 

contract. Such increased participation 

on BATS Options will result in higher 

levels of liquidity provision and 

introduction of higher volumes of orders 

into the price and volume discovery 

processes, which will benefit all 

participants on BATS Options. 

The Exchange also believes that the 

proposed reduction of the rebates for 

Professional/Firm Step-up Add Volume 

Tier 1 and Tier 2 is a reasonable, fair 

and equitable, and not unfairly 

discriminatory allocation of fees and 

rebates because, as stated above, the 

Exchange’s tiered pricing structure is 

designed such that fees and rebates are 

related to the value of 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. As such, 

the Exchange believes that it is 

reasonable, fair, and equitable to lower 

the rebates associated with Professional/ 

Firm Step-up Add Volume Tier 1 and 

Tier 2. In this same light, the Exchange 

notes that the proposed amendments 

would bring the rebate for Professional/ 

Firm Step-up Add Volume Tier 1 and 

Tier 2 in line with that of the Market 

Maker Add Volume Tier. The Exchange 

also notes that Professional and Firm 

orders can continue to receive further 

enhanced rebates through the NBBO 

Setter Tiers and that any order that 

qualifies for either Professional/Firm 

Step-Up Add Volume Tier 1 or Tier 2 

will also qualify for NBBO Setter Tier 1 

where the order sets the national best 

bid or offer. 

The Exchange reiterates 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 to be 

excessive. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. With respect 

to the proposed new rebates in 

Customer Add Volume Tier 1 and 

Professional/Firm Step-Up Tier 1 and 

Tier 2, the Exchange does not believe 

that any such changes burden 

competition, but instead, that they 

enhance competition, as they are 

intended to increase the 

competitiveness of and draw additional 

volume to BATS Options. As stated 

above, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if the deem fee structures to be 

unreasonable or excessive. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

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

of the Act 15 and paragraph (f) of Rule 

19b–4 thereunder.16 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 rule-comments@

sec.gov. Please include File Number SR– 

BATS–2015–20 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BATS–2015–20. 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–BATS– 

2015–20 and should be submitted on or 

before April 8, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06124 Filed 3–17–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74487; File No. SR–CHX– 

2015–02] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change 

Concerning the CHX Routing Services 

March 12, 2015. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on March 4, 

2015, the Chicago Stock Exchange, Inc. 

(‘‘CHX’’ or the ‘‘Exchange’’) 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 Exchange. The 

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14194 Federal Register / Vol. 80, No. 52 / Wednesday, March 18, 2015 / Notices 

3CHX Article 1, Rule 1(s) defines ‘‘Participant,’’ 

in pertinent part, as ‘‘any Participant Firm that 

holds a valid Trading Permit and any person 

associated with a Participant Firm who is registered 

with the Exchange under Articles 16 and 17 as a 

Market Maker Trader or Institutional Broker 

Representative, respectively. A Participant shall be 

considered a ‘member’ of the Exchange for purposes 

of the Exchange Act.’’ 

4See Exchange Act Release No. 73150 (September 

19, 2014), 79 FR 57603 (September 25, 2014) (SR– 

CHX–2014–15). 

5 17 CFR 240.19b–4(f)(6)(iii). 

6CHX Article 19, Rule 3(a), which is not yet 

operative, details Routing Events. 

7CHX Article 1, Rule 1(oo), which is not yet 

operative, defines ‘‘Routable Order’’ as ‘‘any 

incoming limit order, as defined under Article 1, 

Rule 2(a)(1), of any size, not marked by any order 

modifiers or related terms listed under Article 1, 

Rule 2 that prohibit the routing of the order to 

another Trading Center.’’ 

8See 17 CFR 242.600(b)(58). 

9See FINRA Rule 6210. 

10Footnote 50 of the initial rule filing provides: 

Where the routed order is smaller than the 

aggregate size of two or more contra-side Protected 

Quotations that could be satisfied, the Exchange 

will rely on the third-party routing broker to utilize 

its smart-routing technology to route the order 

pursuant to a routing table provided by the 

Exchange. Thus, the relevant snapshot of the NBBO 

for Regulation NMS purposes will be taken by the 

third-party routing broker and the third-party 

routing broker would route orders IOC and ISO. 

However, where the routed order is smaller than the 

size of one Protected Quotation that could be 

satisfied or is the same size as the aggregate size of 

one or more contra-side Protected Quotations that 

could be satisfied, the Exchange will direct the 

third-party routing broker to route orders to specific 

routing destinations. Thus, the relevant snapshot of 

the NBBO will be taken by the Exchange and the 

Exchange would mark the directed orders IOC and 

ISO. See supra note 4. 

11 In the event the Exchange decides to modify its 

smart versus direct routing protocol, the Exchange 

will submit a proposed rule filing to that effect, 

pursuant to Rule 19b–4 under the Act. 

12See CHX Article 20, Rule 8(b)(7), which is not 

yet operative. 

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 

CHX proposes to clarify for 

Participants and non-Participants the 

Exchange’s smart versus direct routing 

protocol.3 On September 8, 2014, the 

Exchange filed a proposed rule change 

adopting, among other things, the CHX 

Routing Services, which is a Regulation 

NMS compliant outbound order routing 

service that is not yet operational (‘‘the 

initial rule filing’’), with the Securities 

and Exchange Commission (the 

‘‘Commission’’).4 The Exchange now 

submits this supplemental filing. The 

Exchange has designated this proposed 

rule change as non-controversial and 

provided the Commission with the 

notice required by Rule 19b–4(f)(6)(iii) 

under the Act.5

The text of this proposed rule change 

is available on the Exchange’s Web site 

at (www.chx.com) and in 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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule changes 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 

CHX 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 clarify for 

Participants and non-Participants the 

Exchange’s smart versus direct routing 

protocol related to the CHX Routing 

Services. As described in the initial rule 

filing, upon the triggering of a Routing 

Event,6 the Exchange will route away 

Routable Orders,7 or portions thereof, 

through CHXBD, LLC, which is an 

affiliated routing broker that will 

operate as a facility of the Exchange, 

which would then forward orders to a 

third-party routing broker for routing to 

the ultimate routing destination. All 

orders routed to the third-party routing 

broker will include instructions for the 

third-party routing broker to either 

direct route the order to a specific 

destination or to smart route the order, 

utilizing the third-party routing broker’s 

routing technology, pursuant to a 

routing table provided and maintained 

by the Exchange. 

The Exchange would like to clarify 

the smart versus direct routing protocol 

and to propose special handling of 

Routable Orders in relation to Protected 

Quotations 8 displayed on the 

Alternative Display Facility (‘‘ADF’’) 

operated by the Financial Industry 

Regulatory Authority (‘‘FINRA’’).9 The 

Exchange does not propose to amend 

any CHX Rules nor substantively 

modify the CHX Routing Services in any 

other way. 

Under footnote 50 of the initial rule 

filing,10 the Exchange utilized the term 

‘‘routed order’’ to describe smart versus 

direct routing. For clarity, ‘‘routed 

order’’ describes the portion of a 

Routable Order that is to be routed to 

satisfy Protected Quotations of external 

markets at a single price point. Thus, by 

replacing the term ‘‘routed order’’ with 

the more descriptive phrase ‘‘the 

portion of a Routable Order that is to be 

routed’’ and adding references to ‘‘a 

single price point,’’ the meaning of 

footnote 50 becomes clearer. The 

revised footnote 50 would read as 

follows: 

Where the portion of a Routable Order 

that is to be routed at a certain price 

point is smaller than the aggregate size 

of two or more contra-side Protected 

Quotations that could be satisfied at a 

single price point, the Exchange will 

rely on the third-party routing broker to 

utilize its smart-routing technology to 

route the order pursuant to a routing 

table provided by the Exchange. Thus, 

the relevant snapshot of the NBBO for 

Regulation NMS purposes will be taken 

by the third-party routing broker and the 

third-party routing broker would route 

orders IOC and ISO. However, where 

the portion of a Routable Order that is 

to be routed is smaller than the size of 

one Protected Quotation that could be 

satisfied or is the same size as the 

aggregate size of one or more contra-side 

Protected Quotations that could be 

satisfied at a single price point, the 

Exchange will direct the third-party 

routing broker to route orders to specific 

routing destinations. Thus, the relevant 

snapshot of the NBBO will be taken by 

the Exchange and the Exchange would 

mark the directed orders IOC and ISO. 

The Exchange also proposes to adopt 

special routing handling for Protected 

Quotations displayed on the ADF, as an 

exception to the aforementioned price 

point by price point determination to 

either smart or direct route an order. 

Specifically, upon the triggering of any 

Routing Event based on a Protected 

Quotation displayed on the ADF, the 

Exchange will route away the entire 

remaining balance of the Routable Order 

for smart routing by a third-party 

routing broker. The Exchange submits 

that this special handling is the most 

efficient way for the Exchange to meet 

its Regulation NMS obligations 

regarding Protected Quotation(s) 

displayed on the ADF and is consistent 

with the routing-related rules adopted 

pursuant to the initial rule filing.11

Unexecuted remainders of smart routed 

orders returned to the Matching System 

from the third-party routing broker will 

be handled pursuant to Article 20, Rule 

8(b)(7), as described under the initial 

rule filing.12

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Federal Register / Vol. 80, No. 52 / Wednesday, March 18, 2015 / Notices 14195 

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

14 15 U.S.C. 78f(b)(1). 

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

16 15 U.S.C. 78s(b)(3)(A)(i). 

17 17 CFR 240.19b–4(f)(6). 

18 15 U.S.C. 78s(b)(3)(a)(ii). 

19 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. The Exchange has satisfied this 

requirement. 

20For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 21 17 CFR 200.30–3(a)(12). 

2. Statutory Basis 

The Exchange believes that the 

proposed clarification of the smart 

versus direct routing protocol described 

in the initial rule filing and special 

handling of the Protected Quotations 

displayed on the ADF is consistent with 

Section 6(b) of the Act in general 13 and 

furthers the objectives of Sections 

6(b)(1) 14 and 6(b)(5) in particular.15

Specifically, the Exchange believes that 

the proposed filing would further enable 

the Exchange to be so organized as to 

have the capacity to be able to carry out 

the purposes of the Act and to comply, 

and to enforce compliance by its 

Participants and persons associated 

with its Participants, with the 

provisions of the Act, the rules and 

regulations thereunder, and the rules of 

the Exchange, by clarifying the smart 

versus direct routing protocol for the 

benefit of Participants and nonParticipants, in furtherance of the 

objectives of Section 6(b)(1). For similar 

reasons, the Exchange believes that the 

proposal is also designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in facilitating transaction in securities, 

to remove impediments to, and perfect 

the mechanisms of, a free and open 

market and, in general, by protecting 

investors and the public interest, in 

furtherance of the objectives of Section 

6(b)(5). 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Given that 

the proposed changes promote clarity as 

to existing rules and does not amend 

any rules, the Exchange believes that 

any burden on competition is necessary 

and appropriate as clarity of the 

Exchange’s rules further the purposes of 

the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has been 

filed by the Exchange as a ‘‘noncontroversial’’ rule change pursuant to 

Section 19(b)(3)(A)(i) of the Act 16 and 

Rule 19b–4(f)(6).17 Because the 

foregoing 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 18 and Rule 19b– 

4(f)(6).19

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii), the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. The 

Exchange asserts that waiver of this 

requirement would allow the Exchange 

to clarify its initial rule filing prior to 

the CHX Routing Services becoming 

operational, and notes that the Exchange 

provides these services in a highly 

competitive market in which market 

participants may avail themselves of a 

wide variety of options offered by selfregulatory organizations, alternative 

trading systems and other brokerdealers. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

clarify its rules in a timely manner and 

thereby avoid potential confusion. 

Therefore, the Commission hereby 

waives the 30-day operative delay and 

designates the proposed rule change to 

be operative upon filing with the 

Commission.20

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposal 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 No. SR– 

CHX–2015–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549. 

All submissions should refer to File No. 

SR–CHX–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 changes 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 CHX. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–CHX–2015– 

02 and should be submitted on or before 

April 8, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06091 Filed 3–17–15; 8:45 am] 

BILLING CODE 8011–01–P 

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