Document ID: SEC-2016-1241-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats BZX Exchange, Inc.
Posted Date: 2016-07-18T04:00Z

[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46738-46739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16850]

[[Page 46738]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78306; File No. SR-BatsBZX-2016-33]

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

July 12, 2016.
    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 July 1, 2016, 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.
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    \17\ 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend its Fee Schedule to adopt a 
new tier under footnote 1 called the Cross-Asset Add Volume Tier.
    The text of the proposed rule change is available at the Exchange's 
Web site at 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 amend its Fee Schedule to adopt a new tier 
under footnote 1 called the Cross-Asset Add Volume Tier.
    Currently, with respect to the Exchange's equities trading platform 
(``BZX Equities'') the Exchange determines the liquidity adding rebate 
that it will provide to Members using the Exchange's tiered pricing 
structure. Under such pricing structure, a Member will receive a rebate 
of anywhere between $0.0020 and $0.0034 per share executed, depending 
on the volume tier for which such Member qualifies. Included amongst 
the volume tiers offered by the Exchange are various tiers for purposes 
of BZX Equities pricing, which require participation on the Exchange's 
options platform (``BZX Options'') and are generally referred to as 
``Cross-Asset Tiers''. For instance, pursuant to current footnote 12 of 
the Fee Schedule, the Exchange offers a Cross-Asset Tape B Tier, which 
provides an enhanced rebate of $0.0028 [sic] per share on orders that 
add liquidity in Tape B securities submitted by Members with: (1) A 
Tape B Step-Up Add TCV \5\ from February 2015 equal to or greater than 
0.06%, and (2) Options Market Maker Add TCV \6\ equal to or greater 
than 0.75%.
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    \5\ As defined in the Exchange's Fee Schedule.
    \6\ Id.
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    In connection with the proposed tier described below, the Exchange 
proposes to adopt a definition for Options Customer Add TCV that is 
similar to the definition of Options Market Maker Add TCV set forth on 
the Exchange's Fee Schedule. As proposed, ``Options Customer Add TCV'' 
for purposes of equities pricing would mean ``ADAV resulting from 
Customer orders as a percentage of TCV, using the definitions of ADAV, 
Customer and TCV as provided under the Exchange's fee schedule for BZX 
Options.''
    The Exchange proposes to adopt a new tier under footnote 1 titled 
the ``Cross-Asset Add Volume Tier.'' Under the Cross-Asset Add Volume 
Tier, the Exchange is proposing to provide a rebate of $0.0028 per 
share to Members with: (1) An ADAV as a percentage of TCV equal to or 
greater than 0.15%; and (2) an Options Customer Add TCV equal to or 
greater than 0.10%. As is the case with any other rebates on the Fee 
Schedule, to the extent that a Member qualifies for higher rebates than 
those provided under the proposed Cross-Asset Add Volume Tier, the 
higher rebates shall apply.
Implementation Date
    The Exchange proposes to implement these amendments to its Fee 
Schedule immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of section 6 of the Act,\7\ in general, and 
furthers the objectives of section 6(b)(4),\8\ 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 that the 
proposed tier is equitable and non-discriminatory in it would apply 
uniformly to all Members. The Exchange believes the rates remain 
competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to Members.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    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 patterns, and introduction of higher volumes of 
orders into the price and volume discovery processes.
    The Exchange believes that the proposal to add a Cross-Asset Add 
Volume Tier 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 increased liquidity from this 
proposal also benefits all investors by deepening the

[[Page 46739]]

BZX Equities and BZX Options liquidity pools, offering additional 
flexibility for all investors to enjoy cost savings, 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. The proposed pricing program is also fair and equitable 
in that membership in BZX Options is available to all market 
participants which would provide them with access to the benefits on 
BZX Options provided by the proposed changes, as described above, even 
where a member of BZX Options is not necessarily eligible for the 
proposed increased rebates on the Exchange. Further, the proposed 
changes will result in Members receiving either the same or an 
increased rebate than they would currently receive.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendment to its Fee 
Schedule would impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
    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. The Exchange does not believe the proposed 
amendments would burden intramarket competition as they would be 
available to all Members uniformly.
    The Exchange does not believe that the proposed new Cross-Asset Add 
Volume Tier would burden competition, but instead, enhances 
competition, as it is intended to increase the competitiveness of and 
draw additional volume to the Exchange.

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 \9\ and paragraph (f) of Rule 19b-4 
thereunder.\10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-BatsBZX-2016-33 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-2016-33. 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 the filing also will 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-BatsBZX-2016-33 and should 
be submitted on or before August 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16850 Filed 7-15-16; 8:45 am]
 BILLING CODE 8011-01-P