Document ID: SEC-2015-1670-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2015-10-16T04:00Z

[Federal Register Volume 80, Number 200 (Friday, October 16, 2015)]
[Notices]
[Pages 62588-62590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26328]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76120; File No. SR-BATS-2015-83]

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

October 9, 2015.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on October 1, 2015, 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).
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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.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 fee schedule applicable to the 
Exchange's options platform (``BATS Options'') effective immediately, 
in order to: (i) Increase the fees for certain logical ports; and (ii) 
provide for separate fees based upon the number of logical ports 
utilized.
    A logical port represents a port established by the Exchange within 
the Exchange's system for trading and billing purposes. Each logical 
port established is specific to a Member or non-member and grants that 
Member or non-member the ability to operate a specific application, 
such as FIX order entry or PITCH data receipt. The Exchange's Multicast 
PITCH data feed is available from two primary feeds, identified as the 
``A feed'' and the ``C feed'', which contain the same information but 
differ only in the way such feeds are received. The Exchange also 
offers two redundant fees, identified as the ``B feed'' and the ``D 
feed.'' The Exchange also offers a bulk-quoting interface which allows 
Users \6\ of BATS Options to submit and update multiple bids and offers 
in one message through logical ports enabled for bulk-quoting.\7\ The 
bulk-quoting application for BATS Options is a particularly useful 
feature for Users that provide quotations in many different options.
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    \6\ A User on BATS Options is either a member of BATS Options or 
a sponsored participant who is authorized to obtain access to the 
Exchange's system pursuant to BATS Rule 11.3.
    \7\ See Securities Exchange Act Release Nos. 65133 (August 15, 
2011), 76 FR 52032 (August 19, 2011) (SR-BATS-2011-029) and 65307 
(September 9, 2011), 76 FR 57092 (September 15, 2011) (SR-BATS-2011-
034).
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    Logical ports, including Multicast PITCH Spin Server and GRP ports, 
which are used to request and receive a retransmission of data from the 
Exchange, are currently subject to a fee of $400 per month per port and 
ports with bulk quoting capabilities are charged $1,500 per month per 
port. These fees are set and do not currently vary based on the number 
of ports purchased. In addition, logical port fees are limited to 
logical ports in the Exchange's primary data center and no logical port 
fees are assessed for redundant secondary data center ports. The 
Exchange assesses the monthly per logical port fees for all of a Member 
and non-Member's logical ports.
    The Exchange now proposes to increase the fees for logical ports 
(including Multicast PITCH Spin Server and GRP ports) from $400 per 
port per month to $550 per port per month for the first five ports. 
Multicast PITCH Spin Server Ports and GRP Ports would now be subject to 
a fee of $550 per month for a set of primary ports (A or C feed). The 
Exchange will continue to offer for free the ports necessary to receive 
the Exchange's redundant Multicast ``B feed'' and ``D feed'', as well 
as all ports made available in the Exchange's secondary data center. 
Accordingly, this proposal only applies to ports used to receive an 
Exchange primary Multicast PITCH feeds at the Exchange's primary data 
center. Other than as described below, the Exchange does not propose to 
amend the monthly fee for ports with bulk quoting capabilities.
    Where a User subscribes to more than five ports, the Exchange 
proposes to charge for each port in excess of five $650 per logical 
port per month and $2,000 per month for logical ports with bulk quoting 
capabilities. For example, if a User subscribes to seven logical ports, 
it would pay $550 per port per month for ports one through five and

[[Page 62589]]

$650 per port per month for ports six and seven.. Except for bulk 
quoting ports, which will be separately evaluated, the Exchange will 
sum logical ports across all classifications in order to determine 
applicable fees. For example, if a User subscribes to five logical 
ports and one logical port with bulk quoting capabilities, that User 
would be charged $550 per port per month for each logical port and 
$1,500 per month for the port with bulk quoting capabilities. That User 
would not be charged the increased fees for its sixth ports. However, 
should that User subscribe to six logical ports and one logical port 
with bulk quoting capabilities, that User would be charged $550 per 
port per month for logical ports one through five, $650 per month for 
its sixth logical port, and $1,500 per month for the port with bulk 
quoting capabilities.
Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule effective immediately.
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.\8\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange operates in a highly competitive market in which 
exchanges offer connectivity services as a means to facilitate the 
trading activities of members and other participants. Accordingly, fees 
charged for connectivity are constrained by the active competition for 
the order flow of such participants as well as demand for market data 
from the Exchange. If a particular exchange charges excessive fees for 
connectivity, affected members will opt to terminate their connectivity 
arrangements with that exchange, and adopt a possible range of 
alternative strategies, including routing to the applicable exchange 
through another participant or market center or taking that exchange's 
data indirectly. Accordingly, the exchange charging excessive fees 
would stand to lose not only connectivity revenues but also revenues 
associated with the execution of orders routed to it by affected 
members, and, to the extent applicable, market data revenues. The 
Exchange believes that this competitive dynamic imposes powerful 
restraints on the ability of any exchange to charge unreasonable fees 
for connectivity.
    The Exchange believes that the proposal to increase fees for 
logical ports is equitably allocated, reasonable, and not unfairly 
discriminatory in that the proposal will help the Exchange to cover 
increasing infrastructure costs associated with offering and 
maintaining logical ports connections. The Exchange notes its proposal 
to increase the fee for logical ports equals that currently charged by 
the New York Stock Exchange, Inc. (``NYSE'') and NYSE Arca, Inc. 
(``NYSE Arca'').\10\ In addition, the Exchange believes that charging 
different fees based on the number of ports a User subscribes to is 
also equitably allocated, reasonable, and not unfairly discriminatory 
because proposed fees based on the number of ports subscribed to would 
encourage Users to become more efficient with, and reduce the number of 
ports used, thereby resulting in a corresponding increase in the 
efficiency that the Exchange would be able to realize with respect to 
managing its own infrastructure. Lastly, the Exchange notes that the 
NYSE and NYSE Arca also previously charged different fees based on the 
number of ports subscribed to.\11\
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    \10\ See File Nos. SR-NYSE-2015-43 (filed September 23, 2015), 
and SR-NYSEArca-2015-87 (filed September 22, 2015) (proposing a fee 
of $550 per port per month). In addition, the charge on the NASDAQ 
Stock Market LLC (``NASDAQ'') for a FIX Trading Port is $550 per 
port per month. See NASDAQ Rule 7015. A separate charge for Pre-
Trade Risk Management ports also is applicable, which ranges from 
$400 to $600 and is capped at $25,000 per firm per month. See NASDAQ 
Rule 7016.
    \11\ See File Nos. SR-NYSE-2015-43 (filed September 23, 2015), 
and SR-NYSEArca-2015-87 (filed September 22, 2015).
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    Lastly, the Exchange also believes that the proposed amendments to 
its fee schedule are non-discriminatory because they will apply 
uniformly to all Members. All Members that voluntarily select various 
service options will be charged the same amount for the same services. 
All Members have the option to select any connectivity option, and 
there is no differentiation among Members with regard to the fees 
charged for the services offered by the Exchange.

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

    The Exchange believes its proposed amendments to its fee schedule 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
    The Exchange believes that fees for connectivity are constrained by 
the robust competition for order flow among exchanges and non-exchange 
markets. Further, excessive fees for connectivity, including logical 
port fees, would serve to impair an exchange's ability to compete for 
order flow rather than burdening competition. The Exchange also does 
not believe the proposed rule change would impact intramarket 
competition as it would apply to all Members and non-Members equally.

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 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 is effective upon filing pursuant to 
Section 19(b)(3)(A)\12\ of the Act and subparagraph (f)(2) of Rule 19b-
4\13\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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

[[Page 62590]]

Commission shall institute proceedings under Section 19(b)(2)(B) \14\ 
of the Act to determine whether the proposed rule change should be 
approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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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-BATS-2015-83 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-BATS-2015-83. 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-BATS-2015-83, and should be 
submitted on or before November 6, 2015.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26328 Filed 10-15-15; 8:45 am]
 BILLING CODE 8011-01-P