Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 49431 

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). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange.’’ See Exchange 

Rule 1.5(n). 

6Fee code B is appended to displayed orders that 

add liquidity to BZX (Tape B) and is provided a 

standard rebate of $0.0025 per share. See the 

Exchange’s fee schedule available at http://

www.bats.com/us/equities/membership/fee_

schedule/bzx/. 

7Fee code V is appended to displayed orders that 

add liquidity to BZX (Tape A) and is provided a 

standard rebate of $0.0020 per share. Id. 

8Fee code Y is appended to displayed orders that 

add liquidity to BZX (Tape C) and is provided a 

standard rebate of $0.0020 per share. Id. 

9 ‘‘OCV’’, for purposes of equities pricing means 

the total equity and ETF options volume that clears 

in the Customer range at the Options Clearing 

Corporation (‘‘OCC’’) 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, using the definition of Customer as 

provided under the Exchange’s fee schedule for 

BZX Options. See the Exchange’s fee schedule 

available at http://www.bats.com/us/equities/ 

membership/fee_schedule/bzx/. 

10 ‘‘Options Market Maker Add OCV’’ for 

purposes of equities pricing means ADAV resulting 

from Market Maker orders as a percentage of OCV, 

using the definitions of ADAV, Market Maker and 

OCV as provided under the Exchange’s fee schedule 

for BZX Options. Id. 

11 ‘‘ADV’’ means average daily volume calculated 

as the number of shares added or removed, 

combined, per day. Id. 

12 ‘‘TCV’’ means total consolidated volume 

calculated as the volume reported by all exchanges 

and trade reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply. Id. 

13The Exchange initially filed the proposed rule 

change on September 29, 2017 (SR–BatsBZX–2017– 

64). On October 10, 2017, the Exchange withdrew 

SR–BatsBZX–2017–64 and submitted this filing. 

14 15 U.S.C. 78f. 

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

office of OPRA. All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–OPRA– 

2017–01 and should be submitted on or 

before November 15, 2017. 

By the Commission. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–23114 Filed 10–24–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81906; File No. SR– 

BatsBZX–2017–67] 

Self-Regulatory Organizations; Bats 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Related to 

Transaction Fees for the Exchange’s 

Equity Platform 

October 19, 2017. 

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 October 

10, 2017, Bats BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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 BZX Rules 15.1(a) 

and (c). 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.bats.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 amend its 

fee schedule applicable to its equities 

trading platform (‘‘BZX Equities’’) to 

amend the criteria for Cross-Asset Add 

Volume Tier 3 under footnote 1. The 

Exchange currently offers four CrossAsset Add Volume tiers under footnote 

1 that provide an enhanced rebate 

ranging from $0.0028 to $0.0030 per 

share for orders that yield fee codes B,6

V,7 and Y 8 upon a Member achieving 

each tier’s required criteria. Currently, 

under Cross-Asset Add Volume Tier 3, 

Members receives an enhanced rebate of 

$0.0028 per share where they have on 

the Exchange’s equity options platform 

(‘‘BZX Options’’) an ADAV greater than 

or equal to 2.00% of average OCV.9 The 

Exchange now proposes to amend the 

criteria necessary to receive the 

enhanced rebate provided by CrossAsset Tier 3. As amended, Cross-Asset 

Add Volume Tier 3 would require that 

the Member have on BZX Options an 

Options Market Maker Add OCV 10

equal to or greater than 1.85% of 

average OCV and that Member must also 

add an ADV 11 equal to or greater than 

0.10% of TCV.12 The Exchange 

proposes to implement these 

amendments to its fee schedule 

immediately.13

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,14

in general, and furthers the objectives of 

Section 6(b)(4),15 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

other persons using its facilities. The 

Exchange also notes 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 at a particular venue to 

be excessive. The proposed rule change 

reflects a competitive pricing structure 

designed to incent market participants 

to direct their order flow to the 

Exchange. The Exchange believes the 

rates remain competitive with those 

charged by other venues and, therefore, 

reasonable and equitably allocated to 

Members. 

Volume-based rebates and fees such 

as the proposed Cross-Asset Add 

Volume Tier 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 


sradovich on DSK3GMQ082PROD with NOTICES
49432 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 

16See Exchange Rule 22.5(a). 

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

18 17 CFR 240.19b–4(f). 

patterns, and introduction of higher 

volumes of orders into the price and 

volume discovery processes. 

The Exchange believes that the 

proposal to modify the criteria for CrossAsset Add Volume Tier 3 is a 

reasonable, fair and equitable, and not 

unfairly discriminatory allocation of 

fees and rebates because it will provide 

Members with an additional incentive 

to reach certain thresholds on both BZX 

Equities and BZX Options. The revised 

criteria continues to be reasonably 

related to the rebate provided by the 

tier. The Exchange believes decreasing 

the first prong of the tier’s criteria to 

1.85% but limiting it to Options Market 

Maker Add OCV, and adding the second 

prong requiring that the Member add an 

ADV equal to or greater than 0.10% of 

TCV ensures the difficulty of achieving 

the tier remains relatively the same, 

while adjusting it to reflect current 

market dynamics. The potential 

increased liquidity from this proposal 

also benefits all investors by deepening 

the BZX Equities and BZX Options 

liquidity pools, supporting the quality 

of price discovery, promoting market 

transparency and improving investor 

protection. Such pricing programs 

thereby reward a Member’s growth 

pattern on the Exchange and such 

increased volume increases potential 

revenue to the Exchange, and will allow 

the Exchange to continue to provide and 

potentially expand the incentive 

programs operated by the Exchange. To 

the extent a Member participates on the 

Exchange but not on BZX Options, the 

Exchange does believe that the proposal 

is still reasonable, equitably allocated 

and non-discriminatory with respect to 

such Member based on the overall 

benefit to the Exchange resulting from 

the success of BZX Options. As noted 

above, such success allows the 

Exchange to continue to provide and 

potentially expand its existing incentive 

programs to the benefit of all 

participants on the Exchange, whether 

they participate on BZX Options or not. 

Lastly, the Exchange believes that 

limiting one prong of the tier’s required 

criteria to Options Market Makers is not 

unfairly discriminatory because it is 

intended to increase Market Maker 

participation on BZX Options. Market 

Makers have affirmative obligations to 

maintain fair and orderly markets and to 

maintain a two-sided market in those 

options series in which it is registered.16

Encouraging Market Maker’s [sic] to 

achieve certain volume criteria on BZX 

Options in order to receive the tier’s 

enhanced rebate, therefore, benefits all 

market participants by increasing the 

depth of the BZX Options liquidity pool 

and improving the market quality of the 

Exchange. The Exchange notes that the 

proposed criteria is not only limited to 

the Member’s Options Market Making 

on BZX Options. The proposed criteria 

also requires that the Member meet 

certain volume requirements on BZX 

Equities and does require [sic] the 

Member be registered as a Market Maker 

to satisfy the tier. 

(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. The 

Exchange does not believe that any of 

the proposed change [sic] to the 

Exchange’s tiered pricing structure 

burden competition, but instead, that 

they enhance competition as they are 

intended to increase the 

competitiveness of the Exchange by 

modifying pricing incentives in order to 

attract order flow and incentivize 

participants to increase their 

participation on the Exchange. The 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem fee structures to be unreasonable 

or excessive. The proposed changes are 

generally intended to enhance the 

rebates for liquidity added to the 

Exchange, which is intended to draw 

additional liquidity to the Exchange, 

and to eliminate a rebate that has not 

achieved its desired result. The 

Exchange does not believe the proposed 

amendments would burden intramarket 

competition as they would be available 

to all Members uniformly. 

(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 

unsolicited 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 Number SR– 

BatsBZX–2017–67 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–BatsBZX–2017–67. 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–BatsBZX– 

2017–67 and should be submitted on or 

before November 15, 2017. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 49433 

19 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. 80041 

(February 14, 2017), 82 FR 11252 (‘‘Notice’’). 

4See Securities Exchange Act Release No. 80364, 

82 FR 17065 (April 7, 2017). 

5See letters from: Ryan Hitch, Head of Equities 

Trading, XR Securities LLC, dated February 24, 

2017 (‘‘XR Securities Letter’’); Douglas A. Cifu, 

Chief Executive Officer, Virtu Financial LLC, dated 

February 27, 2017 (‘‘Virtu Letter’’); Joanna Mallers, 

Secretary, FIA Principal Traders Group, dated 

March 13, 2017 (‘‘FIA PTG Letter’’); Adam Nunes, 

Head of Business Development, Hudson River 

Trading LLC, dated March 13, 2017 (‘‘Hudson River 

Trading Letter’’); R.T. Leuchtkafer, dated March 14, 

2017 (‘‘Leuchtkafer Letter’’); Stephen John Berger, 

Managing Director, Government & Regulatory 

Policy, Citadel Securities, dated March 14, 2017 

(‘‘Citadel Letter’’); Tyler Gellasch, Executive 

Director, Healthy Markets Association, March 17, 

2017 (‘‘Healthy Markets Letter’’); Elizabeth K. King, 

General Counsel and Corporate Secretary, New 

York Stock Exchange, dated March 20, 2017 

(‘‘NYSE Letter’’); James G. Ongena, Executive Vice 

President and General Counsel, CHX, dated March 

24, 2017 (‘‘CHX Letter’’); Steve Crutchfield, Head of 

Market Structure, CTC Trading Group, LLC, dated 

April 4, 2017 (‘‘CTC Trading Letter’’); and Theodore 

R. Lazo, Managing Director and Associate General 

Counsel, Securities Industry and Financial Markets 

Association, dated May 17, 2017 (‘‘SIFMA Letter’’). 

All comments on the proposed rule change are 

available at https://www.sec.gov/comments/sr-chx2017-04/chx201704.htm. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 80740, 

82 FR 24412 (May 26, 2017) (‘‘OIP’’). In the OIP, 

the Commission specifically requested comment on 

thirteen questions. See id. at 24416. 

8See letters from: R.T. Leuchtkafer, dated June 

15, 2017 (‘‘Leuchtkafer Letter 2’’); Stephen Berger, 

Managing Director, Government and Regulatory 

Policy, Citadel Securities, dated June 16, 2017 

(‘‘Citadel Letter 2’’); Joanna Mallers, Secretary, FIA 

Principal Traders Group, dated June 16, 2017 (‘‘FIA 

PTG Letter 2’’); James G. Ongena, Executive Vice 

President, General Counsel, CHX, dated June 30, 

2017 (‘‘CHX Letter 2’’); R.T. Leuchtkafer, dated July 

7, 2017 (‘‘Leuchtkafer Letter 3’’); R.T. Leuchtkafer, 

dated July 10, 2017 (‘‘Leuchtkafer Letter 4’’); and 

R.T. Leuchtkafer, dated October 7, 2017 

(‘‘Leuchtkafer Letter 5’’). 

9 15 U.S.C. 78s(b)(2). 

10See Securities Exchange Act Release No. 81415, 

82 FR 40051 (August 23, 2017). 

11The variable delay does not include the 350- 

microsecond intentional access delay. The variable 

delay will depend on factors including, but not 

limited to, messaging volume and system 

processing. See Amendment No. 1, infra note 12, at 

28. 

12 In Amendment No. 1, the Exchange also 

supplemented its rationale for the proposed rule 

change, provided additional discussion related to 

the market quality enhancements that it believes 

would be realized from the proposal, corrected 

certain errors in the examples set forth in the 

proposal, and corrected a misstatement by the 

Exchange in one of its comment letters. 

Amendment No. 1 is available at https://

www.sec.gov/comments/sr-chx-2017-04/chx201704- 

2583844-161106.pdf. 

13 In Amendment No. 2, the Exchange: (1) 

Amended the proposal so that the LEAD would 

apply only during the regular trading session; (2) 

revised the definition of ‘‘Qualified Executions’’ to 

measure executions during the regular trading 

session only; (3) modified its description of its 

review for compliance with the minimum 

performance standards to provide that the Exchange 

would review LEAD MM quoting and trading 

activity on a monthly basis, and that trading days 

on which a LEAD MM was prohibited by CHX rules 

from submitting orders from its trading account 

would be excluded from such review; (4) modified 

its description of the data that will be published on 

its Web site; (5) modified its description of the PEV 

data that will be collected; and (6) clarified its 

description of one of the order origin categories into 

which the variable processing delay statistics will 

be divided and amended and added delay ranges 

for which data will be collected. Amendment No. 

2 is available at https://www.sec.gov/comments/srchx-2017-04/chx201704-2643435-161294.pdf. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–23119 Filed 10–24–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81913; File No. SR–CHX– 

2017–04] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing of Amendments No. 1 and No. 

2 and Order Granting Accelerated 

Approval of a Proposed Rule Change, 

as Modified by Amendments No. 1 and 

No. 2, To Adopt the CHX Liquidity 

Enhancing Access Delay on a Pilot 

Basis 

October 19, 2017. 

I. Introduction 

On February 10, 2017, the Chicago 

Stock Exchange, Inc. (‘‘CHX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to adopt the CHX Liquidity 

Enhancing Access Delay (‘‘LEAD’’), 

which would require all new incoming 

orders, cancel, and cancel/replace 

messages to be subject to a 350- 

microsecond intentional access delay 

except for: (1) Orders that would 

provide liquidity submitted by a LEAD 

Market Maker (‘‘LEAD MM’’ or 

‘‘LMM’’), a new class of CHX market 

maker with heightened quoting and 

trading obligations (referred to 

collectively as the ‘‘minimum 

performance standards’’); and (2) cancel 

messages originating from a LEAD MM’s 

trading account. The proposed rule 

change was published for comment in 

the Federal Register on February 21, 

2017.3 On April 3, 2017, the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether the proposed rule 

change should be disapproved.4 The 

Commission received eleven comment 

letters on the proposed rule change, 

including a response from the 

Exchange.5 On May 22, 2017, the 

Commission instituted proceedings 

under Section 19(b)(2)(B) of the 

Exchange Act 6 to determine whether to 

approve or disapprove the proposed 

rule change.7 Thereafter, the 

Commission received seven more 

comment letters, including a response 

from the Exchange.8 On August 17, 

2017, pursuant to Section 19(b)(2) of the 

Exchange Act,9 the Commission 

designated a longer period for 

Commission action on proceedings to 

determine whether to disapprove the 

proposed rule change.10

On September 19, 2017, the Exchange 

filed Amendment No. 1 to the proposed 

rule change. In Amendment No. 1, the 

Exchange proposed to implement the 

proposed rule change as a 24-month 

pilot program, during which time the 

Exchange would collect and publicly 

disclose (following the sixth month of 

the pilot program) the following data: 

(1) Quote quality statistics, designed to 

provide comparative data regarding the 

effect of LEAD on market quality, for 

each security per trading day and for 

each period of exceptional volatility 

(‘‘PEV’’) range (‘‘PEV Range’’), for the 

six months immediately preceding the 

implementation of the pilot program 

and for the duration of the pilot 

program; (2) matched trade difference 

statistics, designed to compare the 

reliability of CHX quotes with and 

without the LEAD, for each security 

assigned to a LEAD MM (‘‘LEAD MM 

Security’’) per trading day and per PEV 

Range, for the duration of the pilot 

program; (3) volume statistics, designed 

to measure the impact of LEAD on 

execution volume in LEAD MM 

Securities for the duration of the pilot 

program; (4) variable processing delay 

statistics, designed to provide 

comparative data regarding the variable 

delay 11 between the initial receipt of an 

order and the time that the order is 

eligible to be matched by CHX’s 

matching system for the duration of the 

pilot program; and (5) effective spread 

statistics, designed to measure the 

impact of the LEAD on CHX and 

national market system (‘‘NMS’’) 

effective spreads for the duration of the 

pilot program.12 On October 18, 2017, 

the Exchange filed Amendment No. 2 to 

the proposed rule change.13 This order 

approves the proposed rule change, as 


sradovich on DSK3GMQ082PROD with NOTICES