Document ID: SEC-2011-1479-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Y-Exchange, Inc.
Posted Date: 2011-10-03T04:00Z

[Federal Register Volume 76, Number 191 (Monday, October 3, 2011)]
[Notices]
[Pages 61125-61127]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25378]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65406; File No. SR-BYX-2011-023]

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

September 27, 2011.
    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 September 14, 2011, BATS Y-Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the fee schedule applicable to 
Members\5\ of the Exchange pursuant to BYX 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 September 16, 2011.
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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.

[[Page 61126]]

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 September 16, 2011, in order to adopt a fee 
for any order subject to price sliding that adds liquidity to the 
Exchange and receives price improvement over its ranked price when 
executed. Pursuant to Exchange price sliding, an order that would lock 
or cross a protected quotation is ranked on the Exchange's order book 
at the locked price and then displayed at one minimum price level less 
aggressive than the locking price. For bids, this means that a price 
slid order is displayed at one minimum price variation less than the 
current national best offer (``NBO''), and for offers, this means that 
a price slid order is displayed at one minimum price variation more 
than the current national best bid (``NBB'').
    The Exchange received approval in June of a rule change to allow a 
non-displayed order or an order subject to the price sliding process 
that is not executable at its most aggressive price to be executed at 
one-half minimum price variation less aggressive than the price at 
which it is ranked.\6\ The Exchange immediately implemented the change 
for non-displayed orders, but delayed the implementation related to 
orders subject to price sliding in order to complete development of the 
necessary system functionality. On September 16, 2011, the Exchange 
plans to implement the systems change to allow an order subject to 
price sliding to execute at one-half minimum price variation less 
aggressive than the price at which such order is ranked. Specifically, 
in the event an order submitted to the Exchange on the side opposite 
such a price slid order is a market order or a limit order priced more 
aggressively than the locking price, the Exchange will execute the 
resting order subject to price sliding at, in the case of a resting 
bid, one-half minimum price variation less than the locking price, and, 
in the case of a resting offer, at one-half minimum price variation 
more than the locking price. Based on the functionality, orders 
executed as described above will receive price improvement over the 
price at which such orders are ranked. Because price slid orders 
subject to the order handling process described above will receive 
price improvement, the Exchange proposes to execute the orders subject 
to a fee of $0.0030 per share, which is the same fee imposed for 
executions of non-displayed orders that receive price improvement when 
executed. The Exchange believes that price improvement received for 
executions of orders subject to price sliding will offset the 
additional fee charged by the Exchange for such orders.
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    \6\ See Securities Exchange Act Release No. 64753 (June 27, 
2011), 76 FR 38714 (July 1, 2011) (SR-BYX-2011-009) (Order Approving 
a Proposed Rule Change to Amend BATS Rule 11.9, entitled ``Orders 
and Modifiers'' and BATS Rule 11.13, entitled ``Order Execution'').
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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.\7\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\8\ 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 fee applicable to any execution of a price slid order that 
receives price improvement over its ranked price is competitive, fair 
and reasonable, and non-discriminatory in that the fee will apply 
uniformly to all Members and because the proposed fee is the same fee 
imposed for non-displayed orders that are handled similarly. Finally, 
the Exchange believes that the additional fee for executions of orders 
subject to price sliding that receive price improvement is appropriate 
because the price improvement received will offset the change in the 
fee structure for such orders.
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    \7\ 15 U.S.C. 78f.
    \8\ 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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act\9\ and Rule 19b-
4(f)(2) thereunder,\10\ the Exchange has designated this proposal as 
establishing or changing a due, fee, or other charge applicable to the 
Exchange's Members and non-members, which renders the proposed rule 
change effective upon filing.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-BYX-2011-023 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 61127]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-BYX-2011-023. 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 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-BYX-
2011-023 and should be submitted on or before October 24, 2011.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25378 Filed 9-30-11; 8:45 am]
BILLING CODE 8011-01-P