Document ID: SEC-2009-1277-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; BATS Exchange, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend BATS Fee Schedule to Impose Fees for Ports Used for Order Entry and Receipt of Market Data
Posted Date: 2009-09-08T04:00Z

[Federal Register: September 8, 2009 (Volume 74, Number 172)]
[Notices]               
[Page 46256-46257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se09-134]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60586; File No. SR-BATS-2009-026]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
To Amend BATS Fee Schedule to Impose Fees for Ports Used for Order 
Entry and Receipt of Market Data

August 28, 2009.
    On July 21, 2009, BATS Exchange, Inc. (``BATS'' or ``Exchange'') 
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 
amend the fee schedule applicable to Members \3\ and non-members of the 
Exchange with respect to ports used to enter orders into Exchange 
systems and to receive data from the Exchange. The proposed rule change 
was published for comment in the Federal Register on July 28, 2009.\4\ 
The Commission received no comments regarding the proposal. On August 
27, 2009, the Exchange filed Amendment No. 1 to the proposed rule 
change.\5\ This order grants approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange. See BATS Rule 1.5(n).
    \4\ Securities Exchange Act Release No. 60364 (July 22, 2009), 
74 FR 37285 (``Notice'').
    \5\ In Amendment No. 1, the Exchange replaced the bracketed 
``[July]'' with ``[August]'' in the proposed rule text to reflect 
the fact that the current fee schedule is dated August 1, 2009. 
Because the change in Amendment No. 1 is technical in nature, it is 
not subject to notice and comment.
---------------------------------------------------------------------------

    BATS proposes to begin charging a monthly fee for ports used to 
enter orders into the Exchange's trading system and to receive data 
from the Exchange.\6\ Specifically, the Exchange proposes to charge 
$250.00 per month per pair \7\ of any port type other than a Multicast 
PITCH Spin Server Port or a GRP Port. Thus, the proposed charge will 
apply to all Exchange FIX, FIXDROP, DROP, TCP PITCH, TCP FAST PITCH, 
and TOP ports.\8\ 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.\9\ 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. 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.
---------------------------------------------------------------------------

    \6\ The Commission notes that BATS will implement the proposed 
port fees commencing on the first day of the month immediately 
following Commission approval of this proposed rule change (or on 
the date of approval, if on the first business day of a month). See 
Notice, supra note 4.
    \7\ 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.
    \8\ 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.
    \9\ 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 it is a relatively new 
offering by the Exchange and because the Exchange believes that the 
feed is its most efficient feed and will reduce infrastructure costs 
for both the Exchange and those who utilize the feed.
---------------------------------------------------------------------------

    The proposed rule change will apply 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 states that it 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, the Exchange states that its infrastructure costs 
have increased over time. 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.
    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\10\ Specifically, the Commission finds that the proposal is 
consistent with Section 6(b)(4) of the Act,\11\ which requires the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange Members and other persons using the Exchange's facilities, and 
Section 6(b)(5) of the Act,\12\ which requires, among other things, 
that the rules of a national securities 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, 
and not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Commission also finds that the 
proposed rule change is consistent with Section 6(b)(8) of the Act,\13\ 
which requires that the rules of an exchange not impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. Finally, the Commission finds that the proposed rule change 
is consistent with Rule 603(a) of Regulation NMS,\14\ which requires an 
exclusive processor that distributes information with respect to 
quotations for or transactions in an NMS stock to do so on terms that 
are fair and reasonable and not unreasonably discriminatory.
---------------------------------------------------------------------------

    \10\ In approving this proposed rule change the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(8).
    \14\ 17 CFR 242.603(a).
---------------------------------------------------------------------------

    The Commission believes that the proposed port fees are equitably 
allocated among Members and non-members and do not unfairly or 
unreasonably discriminate between

[[Page 46257]]

customers, issuers, brokers, or dealers because the proposed port fees 
do not distinguish among the type of participant but rather are the 
same for all members and non-members. The Commission also believes that 
BATS was subject to significant competitive pressure to act equitably, 
fairly, and reasonably in setting the port fees, in light of the highly 
competitive nature of the market for execution and routing 
services.\15\ The Commission further notes that the Exchange's proposed 
port fees are consistent with similar port fees charged by other 
exchanges.\16\
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
    \16\ See, e.g., Rule 7015 of The NASDAQ Stock Market LLC 
(``NASDAQ'') (setting forth, among other fees for access services, 
port fees charged to members and non-members used to enter orders 
into NASDAQ trading systems). See also Securities Exchange Act 
Release Nos. 60546 (August 20, 2009), 74 FR 43184 (August 26, 2009) 
(SR-NASDAQ-2009-058) (increasing the monthly fee for each port used 
to enter orders in NASDAQ trading systems from $400 per month to 
$500 per month); 59337 (February 2, 2009), 74 FR 6441 (February 9, 
2009) (SR-BX-2009-004) (establishing fees for ports used by members 
to enter orders); 59615 (March 20, 2009), 74 FR 14604 (March 31, 
2009) (SR-BX-2009-005) (establishing, among other fees, port fees 
for accessing market data).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-BATS-2009-026), as modified 
by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21455 Filed 9-4-09; 8:45 am]

BILLING CODE 8010-01-P