[Federal Register Volume 74, Number 143 (Tuesday, July 28, 2009)]
[Notices]
[Pages 37285-37286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17865]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60364; File No. SR-BATS-2009-026]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing of Proposed Rule Change To Amend BATS Fee Schedule to Impose 
Fees for Ports Used for Order Entry and Receipt of Market Data

July 22, 2009.
    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 July 21, 2009, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') 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 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange has filed a proposed rule change to amend the fee 
schedule applicable to Members \3\ and non-members of the Exchange 
pursuant to BATS Rules 15.1(a) and (c). Pursuant to the proposed rule 
change the Exchange will commence charging fees to Members and non-
members for ports used to enter orders into Exchange systems and to 
receive data from the Exchange. The Exchange will implement the 
proposed rule change on the first day of the month immediately 
following Commission approval (or on the date of approval, if on the 
first business day of a month).
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    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
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    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 purpose of the proposed rule change is to begin charging a 
monthly fee for ports used to enter orders in the Exchange's trading 
system and to receive data from the Exchange. The Exchange proposes to 
charge $250.00 per month per pair \4\ of any port type other than a 
Multicast PITCH Spin Server Port or a GRP Port. Thus, this proposed 
charge will apply to all Exchange FIX, FIXDROP, DROP, TCP PITCH, TCP 
FAST PITCH and TOP ports.\5\ In addition, the Exchange proposes to 
provide all Exchange constituents that receive the Exchange's Multicast 
PITCH Feed with 12 pairs of Multicast PITCH Spin Server Ports free of 
charge and, if such ports are used, one free pair of GRP Ports. The 
Exchange proposes to charge such customers $250.00 per month per 
additional pair of GRP Ports or additional set of 12 pairs of Multicast 
PITCH Spin Server Ports. The Exchange's proposal to provide certain 
ports free of charge to Multicast Pitch customers is designed to 
encourage use of the Exchange's Multicast PITCH Feed because such feed 
is a relatively new offering by the Exchange and because the Exchange 
believes that the feed is its most efficient feed, and thus, will 
reduce infrastructure costs for both the Exchange and those who utilize 
the feed. Any Member or non-member that has entered into the 
appropriate agreements with the Exchange is permitted to receive 
Multicast Pitch Spin Server Ports and GRP Ports from the Exchange.
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    \4\ Each pair of ports will consist of one port at the 
Exchange's primary data center and one port at the Exchange's 
secondary data center.
    \5\ BATS FIX ports are the only ports that may be used to send 
orders and related instructions to the Exchange. All other port 
types, including Multicast PITCH and GRP Ports, permit Members and 
non-members to receive information from the Exchange.
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    Based on the proposal, the change applies to Members that obtain 
ports for direct access to the Exchange, non-member service bureaus 
that act as a conduit for orders entered by Exchange Members that are 
their customers, and market data recipients. The Exchange has 
previously provided ports free of charge to all Members and non-members 
that use such ports for order entry to the Exchange or for receipt of 
market data. However, over time, the Exchange's infrastructure costs 
have increased. In addition, the Exchange believes that providing ports 
free of charge has not encouraged Members and non-members to reserve 
and maintain ports efficiently, but rather, has led to a significant 
number of ports that are reserved and enabled by such market 
participants but are never used or are under used. Accordingly, the 
Exchange believes that the imposition of port fees will help the 
Exchange to continue to maintain and improve its infrastructure, while 
also encouraging Exchange customers to request and enable only the 
ports that are necessary for their operations related to the Exchange.
2. Statutory Basis
    The rule change proposed in this submission 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(b) of the Act.\6\ Specifically, the 
Exchange believes that the proposed change is consistent with Section 
6(b)(4) of the Act,\7\ because it provides an equitable allocation of 
reasonable dues, fees, and other charges among its members and other 
persons using its facilities. The Exchange believes that its proposed 
port fees are reasonable in light of the benefits to members of direct 
market access and

[[Page 37286]]

receipt of data, which data, other than the proposed access fee, is 
currently provided free of charge. In addition, the Exchange believes 
that its fees are equitably allocated among its constituents based upon 
the number of access ports that they require to submit orders to the 
Exchange or receive data from the Exchange. The Exchange believes that 
its fees for access services will enable it to better cover its 
infrastructure costs and to improve its market technology and services.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. Fees 
for market access will be a component of the overall fees charged by 
the Exchange to execute and route orders through the Exchange. As the 
Commission has recognized, the market for execution and routing 
services is extremely competitive.\8\ Market participants that choose 
not to connect directly to the Exchange can readily access liquidity 
available on the Exchange by directing their order flow to other venues 
that, under Regulation NMS, must route to the Exchange if it has posted 
the best price. Accordingly, the Exchange must set its fees, including 
access service fees, at a level that will not deter market participants 
from connecting to the Exchange; otherwise, potential users of the 
Exchange's services will simply direct order flow to the Exchange's 
multiple competitors. In addition, the Exchange believes that the 
proposed port fees are consistent with or less than the port fees 
charged by its competitors. With respect to market data, the Exchange 
does not charge any fees for such data. Although it will now begin 
imposing a fee related to access to such data, for market participants 
that receive such data directly from the Exchange, the Exchange 
believes that its free provision of data justifies such market 
participants paying some amount in order to help the Exchange offset 
the infrastructure costs of providing such data.
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    \8\ Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be 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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#c9bbbca5ace4aaa6a4a4aca7bdba89baacaae7aea6bf"><span class="__cf_email__" data-cfemail="d8aaadb4bdf5bbb7b5b5bdb6acab98abbdbbf6bfb7ae">[email protected]</span></a>. Please include 
File Number SR-BATS-2009-026 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2009-026. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing 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 Number SR-BATS-2009-026 and should be 
submitted on or before August 18, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-17865 Filed 7-27-09; 8:45 am]
BILLING CODE 8010-01-P


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