Document ID: SEC-2014-0454-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2014-03-20T04:00Z

[Federal Register Volume 79, Number 54 (Thursday, March 20, 2014)]
[Notices]
[Pages 15618-15619]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06124]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71727; File No. SR-BATS-2014-005]

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.

March 14, 2014.
    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 4, 2014, 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. 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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    \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 the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to BATS Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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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, 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 the ``Equities Pricing'' section of 
its fee schedule effective March 3, 2014, in order to amend the fees 
for certain routing strategies based on a change of fees at the New 
York Stock Exchange LLC (``NYSE''). The Exchange also proposes to 
remove certain unnecessary language from the definition of ``TCV'', or 
total consolidated volume.
    The Exchange has previously provided a discounted 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). NYSE is implementing certain pricing changes 
effective March 1, 2014, including modification from a fee to remove 
liquidity of $0.0025 per share to a fee of $0.0026 per share.\6\ Based 
on the changes in pricing at NYSE, BATS is proposing to increase its 
fee for Destination Specific Orders \7\ executed at NYSE so that the 
fee remains $0.0001 less per share for orders routed to NYSE. 
Specifically, the Exchange proposes to increase the fee charged for 
BATS + NYSE Destination Specific Orders executed at NYSE from $0.0024 
per share to $0.0025 per share.
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    \6\ See SR-NYSE-2014-09, filed February 24, 2014, available at: 
http://www.nyse.com/nysenotices/nyse/rule-filings/list.
    \7\ As defined in Exchange Rule 11.9(c)(12).
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    In addition, the Exchange offers a variety of routing strategies, 
including ``SLIM'' and ``TRIM,'' each of which has a specific fee for 
an execution that occurs at NYSE.\8\ Consistent with its One Under 
pricing model, the Exchange currently charges $0.0024 per share for 
executions that occur at NYSE through SLIM and TRIM. Based on the 
increased fee at NYSE, the Exchange proposes to increase the fee 
charged for SLIM and

[[Page 15619]]

TRIM orders executed at NYSE from $0.0024 per share to $0.0025 per 
share.
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    \8\ See Exchange Rule 11.13(a)(3)(G) for a description of the 
TRIM routing strategy and Exchange Rule 11.13(a)(3)(H) for a 
description of the SLIM routing strategy.
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    In addition to the changes described above related to orders routed 
to NYSE through certain Exchange routing strategies, the Exchange 
proposes to eliminate certain unnecessary language from the fee 
schedule. Beginning on December 9, 2013, the Exchange temporarily 
excluded odd lot executions from the calculation of average daily TCV, 
as defined on the Exchange's fee schedule as it relates to ``Equities 
Pricing.'' \9\ Specifically, odd lots were excluded from the 
calculation of TCV through January 31, 2014. The Exchange proposes to 
remove language regarding the exclusion of odd lots, as such exclusion 
has expired and is thus no longer necessary.
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    \9\ See Securities Exchange Act Release No. 71140 (December 19, 
2013), 78 FR 78460 (December 26, 2013) (SR-BATS-2013-063).
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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.\10\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\11\ 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 the 
proposed changes to certain of the Exchange's non-standard routing fees 
and strategies are equitably allocated, fair and reasonable, and non-
discriminatory in that they are equally applicable to all Members and 
are designed to provide a reduced fee for orders routed to NYSE through 
Exchange routing strategies as compared to applicable fees for 
executions if such routed orders were instead executed directly by the 
Member at NYSE.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that its removal of language from the 
definition of TCV regarding the odd lot exclusion that has expired is 
consistent with the Act. This change will help to avoid confusion and 
does not substantively change the fees imposed by the Exchange.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. 
Because the market for order execution is extremely competitive, 
Members may readily opt to disfavor the Exchange's routing services if 
they believe that alternatives offer them better value. For an order 
routed through the Exchange and executed at NYSE through the applicable 
routing strategies, the proposed fee change is designed to maintain a 
slight discount compared to the fee the Member would have paid if such 
routed order was instead executed directly by a Member at NYSE. The 
proposed change to remove the language for the exclusion of odd lots 
imposes no burden on competition because such exclusion explicitly 
expired on January 31, 2014.

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 rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and paragraph (f) of Rule 19b-4 
thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-BATS-2014-005 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-BATS-2014-005. 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 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-2014-005 and should be 
submitted on or before April 10, 2014.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06124 Filed 3-19-14; 8:45 am]
BILLING CODE 8011-01-P