Document ID: SEC-2010-1406-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2010-09-14T04:00Z

[Federal Register: September 14, 2010 (Volume 75, Number 177)]
[Notices]               
[Page 55838-55840]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14se10-119]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62858; File No. SR-BATS-2010-023]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Related to 
Fees for Use of BATS Exchange, Inc.

September 7, 2010.
    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 August 30, 2010, BATS Exchange, Inc. (``BATS'' or ``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. BATS 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.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its fee schedule applicable to 
Members \5\ of the Exchange pursuant to BATS Rules 15.1(a) and (c). 
While changes to the fee schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on September 
1, 2010.
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    \5\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.

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[[Page 55839]]

    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 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 proposes to modify the ``equities pricing'' section of 
its fee schedule to: (i) adopt pricing for certain new routing 
strategies that the Exchange recently adopted; (ii) modify its pricing 
for Destination Specific Orders executed at NYSE Arca; (iii) eliminate 
a currently dormant market data product from its fee schedule; and (iv) 
change the name of one of its routing strategies. In addition, the 
Exchange proposes to modify fees applicable to options trading by 
eliminating certain clearing fees that it currently passes on to its 
Members.
(i) Adoption of Fees for New Parallel Routing Strategies
    The Exchange recently adopted rules permitting it to offer certain 
new routing strategies, and plans on offering such routing strategies 
in the near future.\6\ Accordingly, the Exchange proposes to adopt fees 
applicable to such routing strategies. As proposed, the Exchange will 
offer both Parallel D and Parallel 2D routing at the same rate as it 
offers its CYCLE and RECYCLE routing strategies.\7\ Specifically, the 
Exchange proposes to charge $0.0028 per share for executions that occur 
at other trading venues as a result of either Parallel D or Parallel 2D 
routing. The Exchange proposes to offer its Parallel T routing strategy 
with a charge of $0.0033 per share for executions that occur at other 
trading venues as a result of such routing. To be consistent with these 
proposed fees and the current fee structure for CYCLE and RECYCLE 
routed executions, the Exchange proposes to charge 0.28% of the total 
dollar value of the execution for any security priced under $1.00 per 
share that is routed away from the Exchange through Parallel D or 
Parallel 2D. Similarly, and based on the charge of $0.0033 per share 
for Parallel T routing, the Exchange proposes to charge 0.33% of the 
total dollar value of the execution for any security priced under $1.00 
per share that is routed away from the Exchange through Parallel T.
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    \6\ See Securities Exchange Act Release No. 62404 (June 30, 
2010), 75 FR 39303 (July 8, 2010) (SR-BATS-2010-017).
    \7\ See Rule 11.13(a)(3).
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(ii) NYSE Arca Destination Specific Orders
    The Exchange proposes to modify its fee schedule applicable to use 
of the Exchange in order to amend the fees for its BATS + NYSE Arca 
destination specific routing option to continue to offer a ``one 
under'' pricing model. The Exchange has previously provided a 
discounted price fee for Destination Specific Orders routed to certain 
of the largest market centers measured by volume (NYSE, NYSE Arca and 
NASDAQ), which, in each instance has been $0.0001 less per share for 
orders routed to such market centers by the Exchange than such market 
centers currently charge for removing liquidity (referred to by the 
Exchange as ``One Under'' pricing). Based on changes in pricing at NYSE 
Arca, BATS is proposing a change to its price for BATS + NYSE Arca 
Destination Specific Orders to align its fees so they are $0.0001 less 
per share for orders routed to NYSE Arca. Specifically, the Exchange 
proposes to increase the fee charged for BATS + NYSE Arca Destination 
Specific Orders executed at NYSE Arca in Tape A and C securities from 
$0.0028 to $0.0029 per share.
(iii) Deletion of Data Product
    In order to avoid confusion, the Exchange proposes to delete a 
reference on its fee schedule to a specific data product that it is not 
currently offering. Earlier this year, the Exchange proposed and 
received approval to offer certain market data products for a fee for 
the first time. Market Insight was one such product proposed and 
approved to be offered by the Exchange. However, the Exchange has 
decided not to offer this product at this time, and thus, proposes 
deletion of reference to the product from its fee schedule to avoid 
confusion. If the Exchange does decide to offer Market Insight as 
approved, it will provide notice to its Members and will file a rule 
proposal to reinstate reference to Market Insight on its fee schedule.
(iv) Name Change of Routing Strategy
    The Exchange has decided to re-brand one of its routing strategies, 
currently referred to as ``DART,'' as the ``Dark Routing Technique'' or 
``DRT''. Accordingly, the Exchange proposes modification of the 
``DART'' acronym throughout the fee schedule to ``DRT''.
(v) Options Clearing Charges
    The Exchange currently charges $0.05 per contract for its standard 
options routing service and $0.10 per contract for Directed ISOs routed 
to away markets, and, in addition, passes through all destination 
exchange fees for executions at away markets. Effective June 1, 2010, 
the Exchange began passing through to Options Members, in addition to 
destination exchange fees, the actual clearing fees billed to the 
Exchange for the execution of orders routed from the Exchange. The 
Exchange proposes to eliminate the clearing fee pass through charge, 
both to simplify pricing of its routing services and to encourage 
Options Members to utilize the Exchange's routing services.
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.\8\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\9\ 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 if they deem fee levels at a 
particular venue to be excessive. The Exchange believes that its fees 
and credits are competitive with those charged by other venues. 
Finally, the Exchange believes that the proposed rates are equitable in 
that they apply uniformly to all Members.
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    \8\ 15 U.S.C. 78f.
    \9\ 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 imposes 
any burden on competition.

[[Page 55840]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received.

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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 
19b-4(f)(2) thereunder,\11\ because it establishes or changes a due, 
fee or other charge imposed on members by the Exchange. Accordingly, 
the proposal is effective upon filing with the Commission.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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    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 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-BATS-2010-023 on the subject line.

Paper Comments

     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-2010-023. 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 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 
a.m. and 3 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-2010-023 and should be 
submitted on or before October 5, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-22836 Filed 9-13-10; 8:45 am]
BILLING CODE 8010-01-P