Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65735 

13BATS assesses lower customer routing fees as 

compared to non-customer routing fees per the 

away market. For example BATS assesses ISE 

customer routing fees of $0.52 per contract and an 

ISE non-customer routing fee of $ 0.65 per contract. 

See BATS BZX Exchange Fee Schedule. 

14See CBOE’s Fees Schedule and ISE’s Fee 

Schedule. 

15See note 11. 

16See note 12. 

17 15 U.S.C. 78s(b)(3)(A)(ii). 18 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. 73094 

(September 15, 2014), 79 FR 56411 (‘‘Notice’’). 

4Regular Trading Hours is defined in Rule 1.5(w). 

5Pre-Opening Session is defined in Rule 1.5(r). 

6BATS Book is defined in Rule 1.5(e). 

customer orders as compared to noncustomer orders.13

The Exchange’s proposal would allow 

the Exchange to continue to recoup its 

costs when routing Customer orders to 

PHLX or NOM as well as away markets 

that pay a rebate when such orders are 

designated as available for routing by 

the market participant. The Exchange 

continues to pass along savings realized 

by leveraging NASDAQ OMX’s 

infrastructure and scale to market 

participants when Customer orders are 

routed to PHLX and NOM and is 

providing those savings to all market 

participants. Today, other options 

exchanges also assess fixed routing fees 

to recoup costs incurred by the 

exchange to route orders to away 

markets.14

Market participants may submit 

orders to the Exchange as ineligible for 

routing or ‘‘DNR’’ to avoid Routing 

Fees.15 Also, orders are routed to an 

away market based on price first.16

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 become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.17 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– 

BX–2014–052 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–BX–2014–052. 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–BX–2014–052 and should 

be submitted on or before November 26, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26227 Filed 11–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73472; File No. SR–BYX– 

2014–018] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Order Granting 

Approval of a Proposed Rule Change 

To Establish an Opening Process 

October 30, 2014. 

I. Introduction 

On September 3, 2014, BATS YExchange, Inc. (the ‘‘Exchange’’ or 

‘‘BYX’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

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

Securities Exchange Act of 1934 

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

proposed rule change to add new BATS 

Rule (‘‘Rule’’) 11.23, entitled ‘‘Opening 

Process,’’ and to make several 

corresponding changes, in order to 

modify the manner in which the 

Exchange opens trading in individual 

securities at the beginning of the day 

and after trading halts. The proposed 

rule change was published for comment 

in the Federal Register on September 

19, 2014.3 The Commission did not 

receive any comments on the proposed 

rule change. This order approves the 

proposed rule change. 

II. Description of the Proposal 

The Exchange has proposed to 

implement a process for opening trading 

at the beginning of Regular Trading 

Hours 4 and re-opening trading in such 

securities following a trading halt. 

Currently, the Exchange accepts orders 

during the Pre-Opening Session,5 and 

any such orders are immediately eligible 

for execution. Orders that are on the 

BATS Book 6 at the beginning of Regular 

Trading Hours remain on the BATS 

Book, subject to the User’s instructions, 

and trading continues into Regular 

Trading Hours without any transition 

period. Upon a halt, the Exchange 

currently cancels all orders on the BATS 

Book and does not accept any orders 

until the halt is lifted. The Exchange 

does not currently have a Regular Hours 

Only (‘‘RHO’’) time-in-force. 

Under the proposal, the Exchange 

would amend its rules to allow orders 

to be designated RHO, and would accept 

and queue any such orders during the 

Pre-Opening Session for execution at 

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65736 Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 

7NBBO is defined in Rule 1.5(o). 

8Only orders designated RHO would be queued 

for Opening Process participation when submitted 

during the Pre-Opening Session; orders not so 

designated would continue to be executable 

immediately upon entry during the Pre-Opening 

Session. 9See proposed Rule 11.9(b)(7). The Exchange also 

has proposed to delete the word ‘‘limit’’ from Rule 

11.9(b) because a RHO order can be either a limit 

order or a market order. See proposed Rule 11.9(b). 10User is defined in Rule 1.5(cc). 11See proposed Rule 11.23(a). 

12See proposed Rule 11.23(a)(2). For the 

definitions of BYX’s order types, see Rule 11.9. 

13See proposed Rule 11.23(a)(2). 

14 Id. 

15 Id. 

16See proposed Rule 11.23(a). 

17See proposed Rule 11.23(a)(1). 

18 Id. 

19See proposed Rule 11.23(a)(3). 

20 Id. According to the Exchange, time priority is 

more appropriate for the Opening Process than 

price-time priority because the price of the order is 

not particularly important to the Opening Process, 

so long as the order is priced at or more aggressively 

than the midpoint of the NBBO. As such, the 

Exchange believes that there is no reason to reward 

a more aggressive order with priority in the 

Opening Process. See Notice, supra note 3, 79 FR 

at 56412–13. 

21See proposed Rule 11.23(b). 

22Trading Center is defined in Rule 2.11(a). 

23See proposed Rule 11.23(b). 

24See Notice, supra note 3, 79 FR at 56413. 

25See proposed Rule 11.23(c). 

26See Notice, supra note 3, 79 FR at 56413. 

27See proposed Rule 11.23(d). 

28See Notice, supra note 3, 79 FR at 56413. 

29System is defined in Rule 1.5(aa). 

30See proposed Rule 11.18(f). 

31See proposed Rule 11.23(e). 

the midpoint of the NBBO 7 shortly after 

the beginning of Regular Trading Hours 

(the ‘‘Opening Process’’).8 The Exchange 

also has proposed to implement a 

similar process for re-opening trading 

after a halt, suspension, or pause 

(collectively, a ‘‘Halt’’), under which a 

User’s orders would remain on the 

BATS Book unless the User has 

designated that they be cancelled upon 

a Halt (the ‘‘Re-Opening Process’’). 

Specifically, the Exchange has 

proposed new Rule 11.9(b)(7), which 

would define RHO as a time-in-force 

modifier that applies to all securities.9

Prior to the beginning of Regular 

Trading Hours, Users 10 that wish to 

participate in the Opening Process may 

enter orders to buy or sell with a time 

in force of RHO.11 All orders that are 

marked as RHO may participate in the 

Opening Process except BATS Post 

Only Orders, Partial Post Only at Limit 

Orders, ISO orders not modified by Rule 

11.23(a)(1) (as described below), and 

Minimum Quantity Orders.12 Limit 

orders with a Reserve Quantity could 

participate to the full extent of their 

displayed size and Reserve Quantity.13

Discretionary Orders could participate 

only up to their ranked price for buy 

orders or down to their ranked price for 

sell orders; the discretionary range of 

such orders would not be eligible for 

participation in the Opening Process.14

All Pegged Orders and Mid-Point Peg 

Orders would be eligible for execution 

in the Opening Process based on their 

pegged prices.15 Orders cancelled before 

the Opening Process and orders not 

designated RHO would not be eligible to 

participate in the Opening Process.16

Pursuant to proposed Rule 11.23(a)(1), 

during the period between 9:30 a.m. 

Eastern Time and the occurrence of the 

Opening Process, all non-RHO orders, 

subject to order instructions, and ISOs 

designated RHO may execute against 

eligible Pre-Opening Session contra-side 

interest resting in the BATS Book.17 The 

Exchange has proposed to convert any 

unexecuted portion of an ISO 

designated RHO entered during this 

period into a non-ISO and queue the 

order for participation in the Opening 

Process.18

The Exchange has proposed to 

implement the Opening Process shortly 

after the beginning of Regular Trading 

Hours, at which point the Exchange 

would attempt to execute all orders 

eligible for the Opening Process in a 

particular security at the midpoint of 

the NBBO.19 All such orders would be 

processed in time sequence beginning 

with the order with the oldest time 

stamp, and would be matched until 

there is no remaining volume or there is 

an order imbalance.20 All MTP 

modifiers would be ignored during the 

matching process.21 If no matches can 

be made, or if orders are not executed 

in whole or part due to an imbalance, 

the Opening Process would conclude 

with all orders that participated in the 

Opening Process being placed in the 

BATS Book, cancelled, executed, or 

routed to away Trading Centers 22 in 

accordance with Rule 11.13(a)(2).23 The 

Exchange notes that because an RHO 

order is not executable until the 

Opening Process (rather than upon 

entry), to the extent that any RHO order 

is not executed during the Opening 

Process and is placed on the BATS 

Book, such order will receive a time 

stamp that reflects the time that the 

order was placed on the BATS Book 

during the Opening Process and not the 

time that the order was entered for 

queuing.24

Under proposed Rule 11.23(c), the 

NBBO that the Exchange would use for 

purposes of setting the Opening Process 

price would be: (a) When the listing 

exchange is either the NYSE or NYSE 

MKT, the first NBBO subsequent to the 

first reported trade on the listing 

exchange after 9:30:00 a.m. Eastern 

Time, or the then-prevailing NBBO 

when the first two-sided quotation is 

published by the listing exchange after 

9:30:00 a.m. Eastern Time, if no first 

trade is reported by the listing exchange 

within one second of publication of the 

first two-sided quotation by the listing 

exchange; or (b) for any other listing 

market, the first NBBO disseminated 

after 9:30:00 a.m. Eastern Time.25 The 

Exchange has proposed to differentiate 

its calculation of the NBBO for NYSE 

and NYSE MKT-listed securities from 

its calculation of the NBBO for 

securities listed on other exchanges 

because NYSE and NYSE MKT do not 

offer continuous trading prior to 9:30:00 

a.m. Eastern Time whereas the other 

listing exchanges do offer continuous 

trading prior to 9:30:00 a.m. Eastern 

Time. Thus, according to the Exchange, 

the market for trading in NYSE and 

NYSE MKT-listed securities may take a 

moment to develop after 9:30:00 a.m. 

Eastern Time whereas the market for 

securities listed on other exchanges is 

more fully developed immediately after 

9:30:00 a.m. Eastern Time.26

If the conditions to establish the price 

of the Opening Process set forth under 

proposed Rule 11.23(c) do not occur by 

9:45:00 a.m. Eastern Time, the Exchange 

has proposed to implement a contingent 

opening process (the ‘‘Contingent Open 

Process’’) under which, instead of being 

matched at the midpoint of the NBBO, 

orders would be handled in time 

sequence, beginning with the order with 

the oldest time stamp, and placed on the 

BATS Book, routed, cancelled, or 

executed in accordance with the terms 

of the order.27 The Exchange notes that, 

because an RHO order is not executable 

until the Opening Process (rather than 

upon entry), any order subject to the 

Contingent Open Process that is placed 

on the BATS Book would receive a time 

stamp that reflects the time that the 

order was placed on the BATS Book 

during the Opening Process and not the 

time that the order was entered for 

queuing.28

In addition, the Exchange has 

proposed that, in the event of a Halt, all 

outstanding orders in the System 29 will 

remain on the BATS Book except where 

a User has designated that its orders be 

cancelled.30 While a security is subject 

to a Halt, the Exchange would accept 

and queue orders, prior to the 

resumption of trading in the security, 

for participation in the Re-Opening 

Process.31 The Re-Opening Process 

would occur in the same manner as the 

Opening Process described above, with 

the following exceptions: (1) Non-RHO 

orders would be eligible for 

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Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65737 

32See proposed Rule 11.23(e)(1). The Exchange 

has proposed to wait until the sooner of the first 

execution on the listing market or one second 

following the publication of the first two-sided 

quotation by the listing exchange because no 

continuous trading occurs on any exchange during 

a Halt and, according to the Exchange, waiting will 

provide time for the market to become more fully 

established before determining the price at which 

the Re-Opening Process will occur. 

33See proposed Rule 11.23(e)(2). 34 In approving the proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

35 15 U.S.C. 78f(b)(5). 

36See Notice, supra note 3, 79 FR at 564214. The 

Exchange further states that, because the Opening 

Process price will be the midpoint of the NBBO, the 

Opening Process will occur at a price that is based 

on the best available pricing under current market 

conditions, which also will help create a more 

orderly opening and facilitate the price formation 

process. Id. at 56414. 

37 Id. at 56414. 

38 Id. 

39 Id. 

40 Id.; see also 17 CFR 242.600. 

41See Notice, supra note 3, 79 FR at 56414. 

42 Id. 

43 Id. 

44 Id. 

45 Id. 

46 Id. 

participation in the re-opening, but IOC, 

FOK, BATS Post Only Orders, Partial 

Post Only at Limit Orders, and 

Minimum Quantity Orders would be 

cancelled or rejected, as applicable, and 

any ISO that is not IOC or FOK would 

be converted into a non-ISO and be 

queued for participation in the reopening; and (2) the re-opening would 

occur at the midpoint of: (i) The first 

NBBO subsequent to the first reported 

trade on the listing exchange following 

the resumption of trading after a Halt; or 

(ii) the NBBO when the first two-sided 

quotation is published by the listing 

exchange following the resumption of 

trading after a Halt if no first trade is 

reported by the listing exchange within 

one second of publication of the first 

two-sided quotation by the listing 

exchange.32 The Exchange has proposed 

that, where neither of the above 

conditions required to establish the 

price of the re-opening have occurred, 

the security may be re-opened for 

trading at the discretion of the Exchange 

and orders will be handled in the same 

manner as they are in the Contingent 

Open Process.33

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder that are applicable to a 

national securities exchange.34 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b)(5) of the Act,35 which 

requires, among other things, that the 

rules of an exchange be designed to 

promote just and equitable principles of 

trade, 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 believes that the 

proposal is consistent with the Act 

because it is designed to create a more 

orderly process for opening and reopening trading in securities, and to 

facilitate price formation. Specifically, 

the Exchange believes that the proposed 

Opening Process will create a more 

orderly opening for securities and help 

facilitate the price formation process at 

the beginning of Regular Trading Hours 

because allowing Users to enter orders 

during the Pre-Opening Session for 

queuing and participation in the 

Opening Process should help prevent 

the submission of a flood of orders 

immediately following the beginning of 

Regular Trading Hours.36 For similar 

reasons, the Exchange believes that the 

proposed Re-Opening Process will 

create a more orderly re-opening in 

securities following a Halt and help 

facilitate price formation.37 In addition, 

the Exchange states that allowing 

certain RHO orders (ISOs designated 

RHO) and all non-RHO orders to 

interact (and, in the case of non-RHO 

orders, to be added to the BATS Book 

where there is no contra-side interest) 

during the period between 9:30 a.m. 

Eastern Time and the occurrence of the 

Opening Process will create a more 

orderly opening and facilitate the price 

formation process because Users will 

have the option to enter orders that will 

either participate in the Opening 

Process or immediately interact with 

liquidity from the Pre-Opening Session, 

allowing trading to continue while the 

Exchange is waiting for the conditions 

necessary to complete the Opening 

Process.38

The Exchange also believes that 

certain features of the Opening Process 

and Re-Opening Process are consistent 

with the Act. The Exchange states that 

the proposed exclusion of BATS Post 

Only Orders, Partial Post Only at Limit 

Orders, ISOs, and Minimum Quantity 

Orders from participation in the 

Opening Process is consistent with 

Section 6(b)(5) of the Act because such 

order types do not make sense in the 

context of queuing orders for the 

Opening Process.39 Moreover, according 

to the Exchange, its proposal to allow an 

ISO marked RHO to execute against 

eligible Pre-Opening Session interest 

during the period between 9:30 a.m. 

Eastern Time and the occurrence of the 

Opening Process, and then convert the 

unexecuted portion of the order into a 

non-ISO for queuing for participation in 

the Opening Process, is consistent with 

the requirements of Regulation NMS.40

According to the Exchange, after 9:30 

a.m. Eastern Time, there may be a 

protected bid or offer displayed by the 

Exchange that a User who has submitted 

an ISO designated RHO would like to 

execute against, and this aspect of the 

proposal would permit such an 

execution to occur prior to the ISO 

being converted into a non-ISO and 

queued for participation in the Opening 

Process.41

In addition, the Exchange states that 

the proposed Contingent Opening 

Process is designed 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 because it will help to 

ensure that the Exchange opens trading 

in a fair and orderly manner by 

providing a means for opening trading 

in a security when there is no two-sided 

NBBO in the security for fifteen minutes 

after the beginning of Regular Trading 

Hours.42 The Exchange believes that 

fifteen minutes is a reasonable amount 

of time to wait for the establishment of 

a two-sided NBBO because it marks a 

point at which the market in a security 

has had a sufficient amount of time to 

develop while simultaneously providing 

a reasonable cut-off point at which the 

Exchange may open the security for 

Regular Trading Hours trading.43 The 

Exchange also believes that handling all 

orders queued for participation in the 

Opening Process in time sequence after 

fifteen minutes will help to ensure that 

trading opens in as fair and orderly a 

manner as possible.44

Lastly, the Exchange states that the 

proposed Opening Process will provide 

Users with greater control and flexibility 

when entering orders in securities by 

allowing them to enter orders for 

participation in Regular Hours Trading 

during the Pre-Opening Session, rather 

than permitting them to enter such 

orders only after Regular Trading Hours 

have begun.45 According to the 

Exchange, allowing Users that do not 

want to participate in the Pre-Opening 

Session to enter RHO orders prior to 

Regular Trading Hours will simplify the 

order entry process for such Users and 

remove impediments to a free and open 

market.46

For the reasons noted above, the 

Commission finds that the proposed 

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65738 Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 

47 15 U.S.C. 78f(b)(5). 

48 15 U.S.C. 78s(b)(2). 

49 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. 78f. 

4 15 U.S.C. 78f(b)(4), (5). 5 15 U.S.C. 78f(b)(8). 

rule change is consistent with the Act, 

including Section 6(b)(5) of the Act,47

which requires, among other things, that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, 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. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,48 that the 

proposed rule change, SR–BYX–2014– 

018, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.49

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–26230 Filed 11–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73470; File No. SR–BX– 

2014–053] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Fee Schedule Under Exchange Rule 

7018(a) With Respect to Transactions 

in Securities Priced at $1 per Share or 

More 

October 30, 2014. 

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 October 

23, 2014, NASDAQ OMX BX, Inc. (‘‘BX’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) a 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 the 

fee schedule under Exchange Rule 

7018(a) with respect to transactions in 

securities priced at $1 per share or 

more. While the changes proposed 

herein are effective upon filing, the 

Exchange has designated that the 

amendments be operative on November 

3, 2014. 

The text of the proposed rule change 

is also available on the Exchange’s Web 

site at http://nasdaqomxbx.cchwall

street.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 is proposing to increase 

a credit provided to member firms 

applicable to transactions in securities 

priced at $1 or more under BX Rule 

7018(a). Specifically, the Exchange 

proposes to increase the credit provided 

to all members that enter an order that 

executes against a midpoint pegged 

order. Currently, the Exchange provides 

a credit of $0.0003 per share executed 

for such an order. The Exchange is 

proposing to increase the credit 

provided to $0.0005 per share executed. 

The Exchange believes that the 

proposed increase in the credit provided 

to member firms for removing midpoint 

liquidity will encourage firms to access 

more resting midpoint liquidity before 

routing to other destinations for price 

improvement opportunities. 

2. Statutory Basis 

BX believes that the proposed rule 

change is consistent with the provisions 

of Section 6 of the Act,3 in general, and 

Sections 6(b)(4) and (b)(5) of the Act,4 in 

particular, because it provides for the 

equitable allocation of reasonable dues, 

fees and other charges among members 

and issuers and other persons using any 

facility or system that the Exchange 

operates or controls, and it does not 

unfairly discriminate between 

customers, issuers, brokers or dealers. 

The proposed rule change is reflective 

of the Exchange’s ongoing efforts to use 

rebates and discounted execution fees to 

attract orders that the Exchange believes 

will improve market quality. Generally, 

the Exchange seeks to provide members 

with discounts that they deem helpful, 

and to eliminate those that they do not. 

The Exchange believes that the 

proposed change is reasonable because 

it promotes these goals by providing an 

increased credit to member firms that 

remove liquidity at the midpoint. In this 

regard, the Exchange believes that this 

credit will incentivize member firms to 

execute against midpoint liquidity and 

this, in turn, will lead to an increase in 

price improvement and liquidity, which 

generally benefits the investing public. 

Moreover, the proposed change is 

reasonable as it is a pro-competitive 

price reduction designed to enhance the 

Exchange’s position in the marketplace 

and broaden the execution 

opportunities for BX members. The 

Exchange also believes that the 

proposed increase in the credit is 

reasonable because it reflects the 

availability of what is, in effect, a price 

reduction for all members that execute 

against a midpoint pegged order. 

The Exchange believes that the 

proposed credit increase is consistent 

with an equitable allocation of fees and 

is not unfairly discriminatory because 

the rebate applies uniformly across all 

members [sic] firms and is provided to 

those firms that elect to execute against 

midpoint pegged orders. BX notes that 

it operates in a highly competitive 

market in which market participants can 

easily and readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

rebate opportunities to be insufficient. 

In such an environment, BX must 

continually adjust its fees or rebates to 

remain competitive with other 

exchanges. BX believes that the 

proposed rule change reflects this very 

competitive environment because it is 

designed to ensure that the credits for 

participation on BX attract order flow 

that improves the market for all 

participants. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended.5

BX notes that it operates in a highly 

competitive market in which market 

participants can readily favor over 40 

mstockstill on DSK4VPTVN1PROD with NOTICES