Document ID: SEC-2010-0576-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2010-04-19T04:00Z

[Federal Register: April 19, 2010 (Volume 75, Number 74)]
[Notices]               
[Page 20418-20420]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ap10-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61883; File No. SR-BATS-2010-007]

 
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.

April 9, 2010.
    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 March 31, 2010, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') 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 April 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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    The text of the proposed rule change is available at the Exchange's 
Web site at http://www.batstrading.com, on the Commission's Web site at 
http://www.sec.gov, 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 modify its fee schedule applicable to use 
of the Exchange effective April 1, 2010, in order to: (i) Increase the 
fee charged by the Exchange for its ``CYCLE'' and ``RECYCLE'' routing 
strategies from $0.0027 per share to $0.0028 per share; (ii) amend the 
fees for certain destination specific routing options to continue to 
offer a ``one under'' pricing model; (iii) adopt pricing for ``BATS + 
DART Destination Specific Orders''; and (iv) make other technical 
changes to the fee schedule.
(i) Increase in Routing Fees for ``CYCLE'' and ``RECYCLE'' Routing
    Based on increased fees at various market centers to remove 
liquidity, the Exchange proposes to modify the fee charged by the 
Exchange for its ``CYCLE'' and ``RECYCLE'' routing strategies from 
$0.0027 per share to $0.0028 per share. To be consistent with this 
change, the Exchange proposes to charge 0.28%, rather than 0.27%, of 
the total dollar value of the execution for any security (all Tapes) 
priced under $1.00 per share that is routed away from the Exchange 
through CYCLE or RECYCLE.
(ii) One Under Pricing for Destination Specific Orders
    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

[[Page 20419]]

pricing at such market centers, BATS is proposing various changes to 
its prices for Destination Specific Orders to align its fees so they 
are $0.0001 less per share for orders routed to such market centers as 
of April 1, 2010. Specifically, because NASDAQ has eliminated the 
distinction in its fees between Tape A, B, and C securities the 
Exchange proposes to eliminate that same distinction for BATS + NASDAQ 
Destination Specific Orders. Thus, the Exchange proposes to normalize 
the fee charged for BATS + NASDAQ Destination Specific Orders executed 
at NASDAQ at $0.0029 per share. Also, based on a change to pricing at 
NYSE Arca, the Exchange proposes to increase the charge from $0.0027 
per share to $0.0028 per share for BATS + NYSE Arca Destination 
Specific Orders executed at NYSE Arca in Tape A and C securities. The 
Exchange will retain the fee of $0.0027 per share for BATS + NYSE Arca 
Destination Specific Orders executed at NYSE Arca in Tape B securities. 
Each of the changes described above will result in the Exchange 
charging $0.0001 less per share for orders routed to certain market 
centers as Destination Specific Orders.
(iii) Pricing for BATS + DART Destination Specific Orders
    Effective April 1, 2010, the Exchange will offer functionality that 
will permit Users to designate orders to route to various Alternative 
Trading Systems selected by the Exchange after first being exposed to 
the BATS Book (a ``BATS + DART Destination Specific Order''). In 
conjunction with this new functionality, the Exchange is proposing to 
amend the fee schedule to include pricing for BATS + DART Destination 
Specific Orders. The Exchange currently offers DART routing as part of 
its general best execution routing. Consistent with the current pricing 
for the DART best execution routing functionality, the Exchange 
proposes to charge $0.0020 per share for a BATS + DART Destination 
Specific Order executed by an Alternative Trading System.
(iv) Technical Changes to Fee Schedule
    The Exchange proposes to correct a typographical error on the fee 
schedule. Also, the Exchange proposes to add a clarifying parenthetical 
to its description of physical connection charges, which are charged 
based on ``pairs.'' As it does within the Equities Pricing/Port Fees 
section of the fee schedule, the Exchange proposes to make clear that a 
pair is comprised of one port at site of the Exchange's primary data 
center and one port at the site of the Exchange's secondary data 
center.
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.\6\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\7\ 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. In addition, the Exchange believes 
that the proposed rates are equitable in that they apply uniformly to 
all Members.
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    \6\ 15 U.S.C. 78f.
    \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 imposes 
any burden on competition.

(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 \8\ and Rule 19b-
4(f)(2) thereunder,\9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 may summarily abrogate 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-2010-007 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-2010-007. 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 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-BATS-2010-007 and should be 
submitted on or before May 10, 2010.

[[Page 20420]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8860 Filed 4-16-10; 8:45 am]
BILLING CODE 8011-01-P