Document ID: SEC-2010-0263-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2010-02-22T05:00Z

[Federal Register: February 22, 2010 (Volume 75, Number 34)]
[Notices]               
[Page 7646-7648]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22fe10-98]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61508; File No. SR-BATS-2010-001]

 
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.

February 5, 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 January 29, 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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 February 1, 
2010.
---------------------------------------------------------------------------

    \5\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
---------------------------------------------------------------------------

    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 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 February 1, 2010, in order to (i) implement a 
fee of 0.10% of the total dollar value for trades that remove liquidity 
in securities priced below $1.00; (ii) increase the fee charged by the 
Exchange for its ``CYCLE'' and ``RECYCLE'' routing strategies from 
$0.0026 per share to $0.0027 per share; and (iii) amend the fees for 
certain destination specific routing options to continue to offer a 
``one under'' pricing model.
(i) Charge for Removing Liquidity in Securities Priced Below $1.00
    The Exchange has not previously charged Members for transactions 
that remove liquidity from or add liquidity to the Exchange's book in 
securities priced below $1.00. The Exchange proposes to begin charging 
0.10% of the total dollar value of the execution for any security (all 
Tapes) priced under $1.00 that removes liquidity from the Exchange's 
book. The Exchange is not proposing to provide a liquidity rebate in 
such securities at this time. The Exchange believes that a nominal fee 
is warranted for securities priced below $1.00 for various reasons, 
including that such transactions inevitably contribute to the overall 
infrastructure costs incurred by the Exchange.
(ii) 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 
$0.0026 per share to $0.0027 per share. To be consistent with this 
change, the Exchange proposes to

[[Page 7647]]

charge 0.27%, rather than 0.26%, 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.
(iii) 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 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 February 1, 2010. 
Specifically, because NYSE Arca has eliminated the distinction in its 
fees between Tape A, B, and C securities the Exchange proposes to 
eliminate that same distinction for BATS + NYSE Arca Destination 
Specific Orders. Thus, the Exchange proposes to normalize the fee 
charged for BATS + NYSE ARCA Destination Specific Orders executed at 
NYSE Arca at $0.0027 per share, which fee is a reduction for Tape A and 
C securities from $0.0029 per share. Also, the Exchange proposes to 
continue to charge $0.0029 per share for BATS + NASDAQ Destination 
Specific Orders executed at NASDAQ in Tape A and C securities, but to 
reduce the fee to $0.0027 per share for BATS + NASDAQ Destination 
Specific Orders executed at NASDAQ 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.
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. The Exchange believes that its fees 
and credits are competitive with those charged by other venues and that 
the various changes it has proposed to reduce its fees will benefit 
Members due to the obvious economic savings Members will receive. For 
those proposed changes that will result in increased fees charged to 
Members, such as the charge for trades that remove liquidity in 
securities below $1.00 and the increased fee for CYCLE and RECYCLE 
routing, the Exchange believes that any additional revenue it receives 
will allow the Exchange to devote additional capital to its operations, 
which may, in turn, benefit Members of the Exchange. Finally, the 
Exchange believes that the proposed rates are equitable in that they 
apply uniformly to all Members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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 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 e-mail to rule-comments@sec.gov. Please include 
File No. SR-BATS-2010-001 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 No. SR-BATS-2010-001. 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,\10\ 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 changes 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 pm. Copies of such filing also will be 
available for inspection and copying at the principal office of BATS. 
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-2010-001 and 
should be submitted on or before March 15, 2010.
---------------------------------------------------------------------------

    \10\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/rules/sro.shtml.

[[Page 7648]]

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

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3330 Filed 2-19-10; 8:45 am]
BILLING CODE 8011-01-P