Document ID: SEC-2017-0259-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats BZX Exchange, Inc.
Posted Date: 2017-02-16T05:00Z

[Federal Register Volume 82, Number 31 (Thursday, February 16, 2017)]
[Notices]
[Pages 10920-10921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03106]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80017; File No. SR-BatsBZX-2017-11]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use on Bats BZX Exchange, Inc. Adding NBBO Setter Tiers

February 10, 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 1, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 BZX Rules 
15.1(a) and (c).
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    \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).
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    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify its fee schedule applicable to the 
Exchange's equities platform to add a new footnote 19, entitled ``NBBO 
Setter Tiers.'' Under the proposed new tiers, orders that establish a 
new National Best Bid or Offer (``NBBO'') and which are appended with 
fee code B, V or Y, would receive an additional rebate ranging from 
$0.0001 to $0.0004 per share. The Exchange proposes to add three NBBO 
Setter Tiers, as set forth below.
     Tier 1 would provide an additional rebate of $0.0001 in 
qualifying orders where a Member has a Setter Add TCV \6\ of at least 
0.05%.
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    \6\ As defined in the Exchange's fee schedule. The Exchange 
notes that this definition has remained in place on the fee schedule 
since the previous period during which the Exchange offered NBBO 
Setter incentives. See infra, note 7 and accompanying text.
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     Tier 2 would provide an additional rebate of $0.0002 in 
qualifying orders where a Member has a Setter Add TCV of at least 
0.10%.
     Tier 3 would provide an additional rebate of $0.0004 in 
qualifying orders where a Member has a Setter Add TCV of at least 
0.15%.
    The Exchange also proposes to update the Fee Codes and Associated 
Fees table accordingly, appending footnote 19 to Fee Codes B, V and Y.
    The Exchange notes that the proposed the NBBO Setter Tiers are 
additive rebates, and thus, can be combined with other incentives and 
structures offered by the Exchange. For instance, while the standard 
rebate for an execution yielding fee code V is $0.0020 per share, a 
Member with an ADAV \7\ of 0.10% (but less than 0.20%) as a percentage 
of TCV,\8\ would qualify for Add Volume Tier 1 under footnote 1, and 
would instead receive an enhanced rebate of $0.0025 per share. If such 
Member also had a Setter Add TCV of at least 0.05% (but less than 
0.10%), such Member would also qualify for NBBO Setter Tier 1 and would 
receive a total rebate of $0.0026 per share (representing the original, 
enhanced rebate of $0.0025 per share plus the $0.0001 additional 
incentive).
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    \7\ As defined in the Exchange's fee schedule.
    \8\ As defined in the Exchange's fee schedule.
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    The Exchange notes that it previously has offered NBBO Setter Tiers 
(as well as an NBBO ``Joiner Tier'' for orders that did not set but 
joined the NBBO), but eliminated these tiers effective May 1,

[[Page 10921]]

2015.\9\ The Exchange is now proposing to re-introduce these incentives 
to encourage Members to contribute to market quality on the Exchange.
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    \9\ See Securities Exchange Act Release No. 74938 (May 12, 
2015), 80 FR 28322 (May 18, 2015) (SR-BATS-2015-35).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ 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. The Exchange believes that the proposed rates are equitable 
and non-discriminatory in that they apply uniformly to all Members that 
qualify. The Exchange believes the proposed rebates are competitive 
with those provided by other venues and therefore continue to be 
reasonable and equitably allocated to Members. Volume-based rebates 
such as those currently maintained on the Exchange have been widely 
adopted by equities and options exchanges and are equitable because 
they are open to all Members on an equal basis and provide additional 
benefits or discounts that are reasonably related to the value to an 
exchange's market quality associated with higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns, and introduction of higher volumes of orders into the price 
and volume discovery processes.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange believes the adoption of the NBBO 
Setter Tiers under footnote 19 is a reasonable means to encourage 
Members to not only increase their liquidity on the Exchange but also 
to contribute to the market quality of the Exchange by offering 
aggressively priced liquidity. The Exchange further believes that the 
proposed tiers represent an equitable allocation of reasonable dues, 
fees, and other charges because the thresholds necessary to achieve the 
tiers encourage Members to add additional liquidity to the Exchange. 
The Exchange further believes that the NBBO Setter Tiers are not 
unreasonably discriminatory as they are equally available to all 
Members.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
the proposed tiers will impose an undue burden on competition because 
the Exchange will uniformly offer the additional rebates to all 
qualifying Members. In fact, the Exchange believes the proposed tiers 
enhance competition, as they are intended to increase the 
competitiveness of and draw additional volume to the Exchange. Further, 
the Exchange believes the proposed tiers enhance competition because 
they are intended to incentivize Members to submit aggressively price 
liquidity to the Exchange. The Exchange does not believe that the 
proposed change represents a significant departure from the Exchange's 
current pricing structure, but instead, is merely another incentive 
offered by the Exchange to encourage Members to contribute to the 
growth of the Exchange. Additionally, Members may opt to disfavor the 
Exchange's pricing if they believe that alternatives offer them better 
value.

B. 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 \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 No. SR-BatsBZX-2017-11 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-BatsBZX-2017-11. 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 No. SR-BatsBZX-2017-11, and should be 
submitted on or before March 9, 2017.
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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\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03106 Filed 2-15-17; 8:45 am]
BILLING CODE 8011-01-P