74794 Federal Register / Vol. 79, No. 241 / Tuesday, December 16, 2014 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5A Member is defined as ‘‘any registered broker 

or dealer that has been admitted to membership in 

the Exchange.’’ See Exchange Rule 1.5(n). 

6 ‘‘Professional’’ applies to any transaction 

identified by a Member as such pursuant to 

Exchange Rule 16.1. 

7 ‘‘Firm’’ applies to any transaction identified by 

a Member for clearing in the Firm range at the OCC. 

8 ‘‘Market Maker’’ applies to any transaction 

identified by a Member for clearing in the Market 

Maker range at the OCC. 

9 ‘‘Penny Pilot Securities’’ are those issues quoted 

pursuant to Exchange Rule 21.5, Interpretation and 

Policy .01. 

10 ‘‘ADV’’ means average daily volume calculated 

as the number of contracts added or removed, 

combined, per day. 

11 ‘‘TCV’’ means total consolidated volume 

calculated as the volume reported by all exchanges 

to the consolidated transaction reporting plan for 

the month for which the fees apply, excluding 

volume on any day that the Exchange experiences 

an Exchange System Disruption and on any day 

with a scheduled early market close. 

12 ‘‘Options Step-Up Add TCV’’ means ADAV as 

a percentage of TCV in June 2014 subtracted from 

current ADAV as a percentage of TCV. 

13See Exchange Act Release No. 72128 (May 8, 

2014), 79 FR 27666 (May 14, 2014) (SR–BATS– 

2014–017). 

14 ‘‘ADAV’’ means average daily added volume 

calculated as the number of contracts added. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29361 Filed 12–15–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73809; File No. SR–BATS– 

2014–064] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

December 10, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

1, 2014, BATS Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

amend the fee schedule applicable to 

Members 5 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). Changes to the fee 

schedule pursuant to this proposal are 

effective upon filing. 

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 

The Exchange proposes to modify the 

‘‘Options Pricing’’ section of its fee 

schedule effective immediately, in order 

to modify pricing charged by the 

Exchange’s options platform (‘‘BATS 

Options’’) including a new September 

Options Step-Up Add TCV tier that will 

apply to certain orders executed on the 

Exchange, as further described below. 

Currently, the Exchange charges $0.48 

per contract for a Professional,6 Firm,7

or Market Maker 8 order in a Penny Pilot 

Security 9 that removes liquidity from 

BATS Options generally, or, where the 

Member has an ADV 10 equal to or 

greater than 1.00% of average TCV,11

$0.47 per contract for a Professional, 

Firm, or Market Maker order in a Penny 

Pilot Security that removes liquidity 

from BATS Options. The Exchange 

offers rebates of $0.40 per share for 

Market Maker orders in Penny Pilot 

Securities that add liquidity to BATS 

Options and, as further discussed 

below, such orders are also eligible for 

additional rebates via the Quoting 

Incentive Program (‘‘QIP’’). The 

Exchange offers rebates of $0.40 to 

Professional and Firm orders in Penny 

Pilot Securities that add liquidity to 

BATS Options and offers an enhanced 

$0.44 rebate for Professional and Firm 

orders that add liquidity to BATS 

Options in Penny Pilot Securities where 

the Member has an Options Step-Up 

Add TCV 12 of equal to or greater than 

0.50%.13 The Exchange also offers 

NBBO setter liquidity rebates in all 

securities such that: (i) A Member will 

receive an additional $0.02 per contract 

for a Professional, Firm, or Market 

Maker order that adds liquidity to the 

BATS Options order book that sets a 

new national best bid or offer where the 

Member has an ADV equal to or greater 

than 0.30% of average TCV but less than 

1.00% of average TCV; and (ii) a 

Member will receive an additional $0.04 

per contract for a Professional, Firm, or 

Market Maker order that adds liquidity 

to the BATS Options order book that 

sets a new national best bid or offer 

where the Member has an ADV equal to 

or greater than 1.00% of average TCV. 

The Exchange is proposing to add the 

definition of ‘‘September Options StepUp Add TCV’’ to its fee schedule along 

with three new fees and rebates 

associated with this new defined term. 

Specifically, the Exchange is proposing 

to define September Options Step-Up 

Add TCV as a Member’s ADAV 14 as a 

percentage of TCV in September 2014 

subtracted from current ADAV as a 

percentage of TCV. Based on this 

definition, the Exchange is proposing to 

add an additional tier to fees charged to 

Professional, Firm, and Market Maker 

orders in Penny Pilot Securities such 

that the Exchange will charge $0.47 per 

contract for a Professional, Firm, or 

Market Maker order that removes 

liquidity from the BATS Options order 

book where the Member has a 

September Options Step-Up Add TCV 

equal to or greater than 0.30% and an 

ADV equal to or greater than 0.40% of 

average TCV. Similarly, the Exchange is 

proposing to add an additional tier to 

liquidity rebates for Professional and 

Firm orders in Penny Pilot Securities 

such that the Exchange will provide a 

$0.44 rebate per contract for a 

Professional or Firm order that adds 

liquidity to the BATS Options order 

book where the Member has a 

September Options Step-Up Add TCV 

equal to or greater than 0.30% and an 

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Federal Register / Vol. 79, No. 241 / Tuesday, December 16, 2014 / Notices 74795 

15 15 U.S.C. 78f. 

16 15 U.S.C. 78f(b)(4). 

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

18 17 CFR 240.19b–4(f). 

ADV equal to or greater than 0.40% of 

average TCV. Finally, the Exchange is 

proposing to add an additional tier to 

the NBBO Setter Liquidity Rebates, 

which apply to all securities, such that 

a Professional, Firm, or Market Maker 

order that adds liquidity to BATS 

Options that sets a new NBBO where 

the Member has a September Options 

Step-Up Add TCV equal to or greater 

than 0.30% and an ADV equal to or 

greater than 0.40% of average TCV will 

receive an additional $0.04 per contract 

added. 

The Exchange proposes to implement 

the amendments to its fee schedule 

effective immediately. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6 of the Act.15

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Section 6(b)(4) of the Act,16 in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among members and other 

persons using any facility or system 

which the Exchange operates or 

controls. The Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues or providers of routing services 

if they deem fee levels to be excessive. 

Volume-based rebates and fees such 

as the ones maintained on BATS 

Options and the new September 

Options Step-Up Add TCV tiers 

proposed herein, have been widely 

adopted by equities and options 

exchanges and are equitable because 

they are open to all Members on an 

equal basis and provide additional 

benefits or discounts that are reasonably 

related to the value to an exchange’s 

market quality associated with higher 

levels of market activity, such as higher 

levels of liquidity provision and/or 

growth patterns, and introduction of 

higher volumes of orders into the price 

and volume discovery processes. 

Further, the Exchange believes the 

proposed amendments are reasonable 

and equitable allocations of fees and 

rebates because the September Options 

Step-Up Add TCV tiers, combined with 

the requirement that a Member achieve 

an ADV of equal to or greater than 

0.40% of average TCV, will provide 

such enhancements in market quality on 

BATS Options by incentivizing 

increased participation on BATS 

Options as compared to September 

2014, especially as it relates to 

incentivizing Members to add orders 

that will set the NBBO on BATS 

Options. The Exchange notes that it is 

not proposing to modify any existing 

tiers, but rather to add new tiers that 

will provide Members with additional 

ways to receive higher rebates or pay 

lower fees. As such, under the proposal 

a Member will receive either the same 

or a higher rebate or be charged either 

the same or a lower fee than they would 

today. Accordingly, the Exchange 

believes that the proposed additions to 

the Exchange’s tiered pricing structure 

and incentives are not unfairly 

discriminatory because they will, except 

as noted below, apply uniformly to all 

Members and are consistent with the 

overall goals of enhancing market 

quality on BATS Options. The Exchange 

notes that it believes that restricting the 

availability of the proposed rebates in 

Penny Pilot Securities associated with 

the September Options Step-Up tier to 

Professional and Firm orders is 

reasonable and equitably allocated as 

well as not unreasonably discriminatory 

because Market Maker orders are 

already afforded an opportunity to 

receive QIP rebates of up to an 

additional $0.04 per contract, a rebate 

which is not available to Professional 

and Firm orders. Professional and Firm 

orders can receive the same maximum 

rebate that Market Maker orders can 

receive via QIP under the existing 

Options Step-Up Add TCV but, 

pursuant to the proposal, the Exchange 

is proposing to add an additional way 

for Professional and Firm orders to 

achieve such rebate via the proposed 

new tier. The Exchange notes that 

Market Maker orders will be eligible for 

both the reduced fees and NBBO Setter 

tiers proposed as part of the September 

Options Step-Up Add TCV tiers. 

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 or providers of routing 

services 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 tiered rebates, the 

Exchange does not believe that any such 

changes burden competition, but 

instead, enhance competition, as they 

are intended to increase the 

competitiveness of and draw additional 

volume to BATS Options. The Exchange 

also believes the proposed step-up tiers 

would enhance competition because 

they are similar to pricing tiers currently 

available on both the Exchange and 

other exchanges. 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 17 and paragraph (f) of Rule 

19b–4 thereunder.18 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 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– 

BATS–2014–064 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. 

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74796 Federal Register / Vol. 79, No. 241 / Tuesday, December 16, 2014 / Notices 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 73443 (Oct. 

28, 2014), 79 FR 65268 (Nov. 3, 2014). 

4Terms not defined herein have the meaning set 

forth in DTC’s Rules, By-Laws, and Organization 

Certificate (‘‘Rules’’), available at http://dtcc.com/∼/ 

media/Files/Downloads/legal/rules/dtc_rules.ashx. 

5Securities Exchange Act Release No. 72576 (Jul. 

9, 2014); 79 FR 41335 (Jul. 15, 2014) (SR–DTC– 

2014–06). 

6A Deliver Order is a book-entry movement of a 

particular security between two Participants. A 

Payment Order is a method for settling funds 

related to transactions and payments not associated 

with a Deliver Order. 

7Omgeo is a leading provider of post-trade, presettlement institutional trade management 

solutions, processing over one million trades per 

day, and servicing approximately 6,500 investment 

managers, broker/dealers, and custodians in over 50 

countries. See About DTCC: Omgeo LLC, http://

dtcc.com/about/businesses-and-subsidiaries/

omgeo.aspx. 

8Receivers may optionally set their DTC profile 

to route ID Transactions to RAD. 

9For processing efficiency, the proposed change 

to the Guide will offer Participants the option to set 

their system profile to allow affirmed ID 

Transactions to be automatically accepted in RAD. 

However, Participants will no longer have an option 

to allow ID Transactions to bypass RAD. 

10 DTC risk management controls, including 

Collateral Monitor and Net Debit Cap (as defined in 

DTC Rule 1), are designed so that DTC may 

complete system-wide settlement notwithstanding 

the failure to settle of its largest Participant or 

affiliated family of Participants. The Collateral 

Monitor tests that a Receiver has adequate collateral 

to secure the amount of its net debit balance and 

the Net Debit Cap limits the net debit balance of a 

Participant so that it cannot exceed DTC liquidity 

resources for settlement. See DTC Rules, http://

dtcc.com/∼/media/Files/Downloads/legal/rules/

dtc_rules.ashx. 

All submissions should refer to File No. 

SR–BATS–2014–064. 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 such 

filing will also 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 No. SR–BATS– 

2014–064 and should be submitted on 

or before January 6, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29364 Filed 12–15–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73804; File No. SR–DTC– 

2014–10)] 

Self-Regulatory Organizations; The 

Depository Trust Company; Order 

Approving Proposed Rule Change in 

Connection With the Modifications To 

Require Receiver Authorized Delivery 

Approval for DTC Processing of 

Institutional Delivery Transactions 

December 10, 2014. 

I. Introduction 

On October 16, 2014, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) proposed rule change 

SR–DTC–2014–10 (‘‘Proposed Rule 

Change’’) pursuant to Section 19(b)(1) of 

the Securities Exchange Act of 1934 

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

The Proposed Rule Change was 

published for comment in the Federal 

Register on November 3, 2014.3 The 

Commission did not receive any 

comments on the Proposed Rule 

Change. This order approves the 

Proposed Rule Change. 

II. Description 

DTC filed the Proposed Rule Change 

to modify the DTC Settlement Service 

Guide (‘‘Guide’’) to require DTC 

Participants 4 to use the Receiver 

Authorized Delivery (‘‘RAD’’) function 

to accept any affirmed institutional 

delivery transaction (‘‘ID Transaction’’) 

prior to DTC processing of the delivery. 

With the Proposed Rule Change, DTC 

seeks to reduce uncertainty in the 

settlement of ID Transactions. 

Pursuant to a recent rule change,5

DTC requires all non-institutional 

Deliver Orders and Payment Orders 6 to 

be approved through RAD. RAD enables 

a receiver of valued deliveries of 

securities (‘‘Receiver’’) to manage which 

deliveries to accept, or to reject, prior to 

further processing by DTC. With this 

process, DTC seeks to establish a 

consistent internal ‘‘matching’’ system 

for book-entry deliveries at DTC. 

ID Transactions generally have not 

required RAD approval because the 

transactions are externally pre-matched 

through Omgeo, LLC,7 although 

Participants were permitted to apply 

RAD voluntarily.8 Because RAD was not 

required, a Receiver could use the sameday reclaim process to return securities 

to the original Participant delivering 

securities (‘‘Deliverer’’) without the 

acceptance of the Deliverer. DTC states 

that this process creates uncertainty for 

Participants and DTC as to whether 

securities will be delivered or reclaimed 

on the same day without the prior 

acceptance of the Receiver or original 

Deliverer. 

Pursuant to the Proposed Rule 

Change, DTC will amend the Guide to 

eliminate this uncertainty by requiring 

the intended Receiver to approve the ID 

Transaction in RAD before DTC 

processes the transaction.9 Same-day 

reclaims will also be subject to RAD 

approval by the original Deliverer, as 

though the reclaim was its own, 

separate transaction. As with any 

securities delivery, these transactions 

will be subject to DTC’s risk 

management controls.10

Additionally, with the Proposed Rule 

Change DTC will make technical 

updates to the Guide: (i) update the text 

for consistency to reflect that all valued 

Deliver Orders, Payment Orders, ID 

Transactions, MMI transactions, 

reclaims, pledges, and releases of 

pledged securities will be subject to 

RAD; (ii) update the text for consistency 

to reflect that all reclaims will be subject 

to risk management controls and remove 

references to system functions related to 

reclaims that have become obsolete; (iii) 

add an email address to which Settling 

Banks seeking to adjust Net Debit Caps 

may send their requests, in addition to 

via mail or overnight delivery to the 

existing mailing address; (iv) indicate 

where Participants may access certain 

system functions via Settlement Web 

either in addition to, or in lieu of, PBS/ 

PTS; (v) eliminate references to fees 

relating to the ID Net service, which are 

redundant since those fees are also 

listed in DTC’s fee schedule; and (vi) 

delete reference to the population of a 

‘‘third party’’ field on DTC’s system 

screens for the ID Net service, which is 

no longer applicable. 

The effective date of the Proposed 

Rule Change, including the dates of the 

implementation phases described above, 

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