Document ID: SEC-2017-0403-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats EDGX Exchange, Inc.
Posted Date: 2017-03-15T04:00Z

[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Pages 13897-13899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05087]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80186; File No. SR-Bats EDGX-2017-12]

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

March 9, 2017.
    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 February 28, 2017, Bats EDGX Exchange, Inc. (the ``Exchange'' 
or ``EDGX'') 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

[[Page 13898]]

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 filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to EDGX Rules 
15.1(a) and (c).
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at www.bats.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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule to remove the 
Single MPID Cross-Asset Tier under footnote 1, Add Volume Tiers. The 
Exchange determines the liquidity adding rebate that it will provide to 
Members using the Exchange's tiered pricing structure. Currently, the 
Exchange offers enhanced rebates under ten Add Volume Tiers set forth 
in footnote 1 of the fee schedule for orders that yield fee codes B,\6\ 
V,\7\ Y,\8\ 3,\9\ and 4.\10\ Under such pricing structure, a Member 
will receive a rebate between $0.0025 and $0.0033 per share executed, 
depending on the tier for which such Member qualifies. The Exchange now 
proposes to amend the Add Volume Tiers under footnote 1 to remove the 
Single MPID Cross-Asset Tier. Under the Single MPID Cross-Asset Tier, a 
Member receives an enhanced rebate of $0.0030 per share where their 
MPID has: (i) On the Exchange's equity options platform (``EDGX 
Options'') an ADAV \11\ in Market Maker \12\ orders greater than or 
equal to 0.12% of average OCV; \13\ and (ii) an ADAV greater than or 
equal to 0.12% of average TCV \14\. The Exchange is proposing to 
eliminate the tier because it has not achieved the desired effect, 
despite being designed to incentivize Members to add liquidity on both 
the Exchange's equites platform and EDGX Options.
---------------------------------------------------------------------------

    \6\ Fee code B is appended to orders which add liquidity to EDGX 
(Tape B) and receives a rebate of 0.00200 per share. See the 
Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/.
    \7\ Fee code V is appended to orders which add to EDGX (Tape A) 
and receives a rebate of 0.00200 per share. Id.
    \8\ Fee code Y is appended to orders which add liquidity to EDGX 
(Tape C) and receives a rebate of 0.00200 per share. Id.
    \9\ Fee code 3 is appended to orders which add liquidity to 
EDGX, pre and post market (Tapes A or C) and receives a rebate of 
0.00200 per share. Id.
    \10\ Fee code 4 is appended to orders which add liquidity to 
EDGX, pre and post market (Tape B) and receives a rebate of 0.00200 
per share. Id.
    \11\ ``ADAV'' means average daily added volume calculated as the 
number of shares added per day and ADV is calculated on a monthly 
basis. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/edgx/.
    \12\ ``Market Maker'' means any transaction identified by a 
Member for clearing in the Market Maker range at the OCC, where such 
Member is registered with the Exchange as a Market Maker as defined 
in Rule 16.1(a)(37). Id.
    \13\ ``OCC Customer Volume'' or ``OCV'' means, for purposes of 
equities pricing, the total equity and ETF options volume that 
clears in the Customer range at the Options Clearing Corporation 
(``OCC'') for the month for which the fees apply, excluding volume 
on any day that the Exchange experiences an Exchange System 
Disruption and on any day with a scheduled early market close, using 
the definition of Customer as provided under the Exchange's fee 
schedule for EDGX Options. Id.
    \14\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply. Id.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement this amendment to its fee 
schedule on March 1, 2017.
2. Statutory Basis
    The Exchange believes that the proposed removal of the Single MPID 
Cross-Asset Tier is consistent with the objectives of Section 6 of the 
Act,\15\ in general, and furthers the objectives of Section 
6(b)(4),\16\ 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. As described above, 
the enhanced rebate offered under this tier has not affected Members' 
behavior in the manner originally conceived by the Exchange--to 
incentivize Members to add liquidity on both the Exchange's equites 
platform and EDGX Options. While the Exchange acknowledges the benefit 
of Members entering orders that add liquidity in two asset classes, the 
Exchange has generally determined that it is providing an additional 
rebate for liquidity that would be added on the Exchange regardless of 
whether the tier existed. As such, the Exchange also believes that the 
proposed elimination of the Single MPID Cross-Asset Tier would be non-
discriminatory in that it currently applies equally to all Members and, 
upon elimination, would no longer be available to any Members. Further, 
it's [sic] elimination will allow the Exchange to explore other pricing 
mechanisms in which it may enhance market quality for all Members.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange does not believe its proposal to remove the Single 
MPID Cross-Asset Tier under footnote 1 would impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. But rather, this proposal would enhance the 
Exchange's ability to compete with other market centers. As described 
above, the Exchange believes that it is offering enhanced rebates for 
orders that would be submitted to the Exchange without the enhanced 
rebate, which prevents the Exchange from being able to offer other 
rebates or reduced fees that might be able to enhance market quality to 
the benefit of all Members. As such, removing the Single MPID Cross-
Asset Tier will allow the Exchange other opportunities to enhance 
market quality on the Exchange and ultimately, better compete with 
other market centers.

[[Page 13899]]

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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 No. SR-BatsEDGX-2017-12 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 No. SR-BatsEDGX-2017-12. 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 No. SR-BatsEDGX-2017-12, and should be 
submitted on or before April 5, 2017.
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05087 Filed 3-14-17; 8:45 am]
 BILLING CODE 8011-01-P