Document ID: SEC-2010-0034-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend BATS Fee Schedule To Impose Fees for Physical Ports Used To Connect to BATS Exchange
Posted Date: 2010-01-08T05:00Z

[Federal Register Volume 75, Number 5 (Friday, January 8, 2010)]
[Notices]
[Pages 1109-1110]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: X10-840108]

[[Page 1109]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61260; File No. SR-BATS-2009-032]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing of Proposed Rule Change To Amend BATS Fee Schedule To Impose 
Fees for Physical Ports Used To Connect to BATS Exchange

December 30, 2009.
    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 December 18, 2009, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') 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 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange has filed a proposed rule change to amend the fee 
schedule applicable to Members \3\ and non-members of the Exchange 
pursuant to BATS Rules 15.1(a) and (c). Pursuant to the proposed rule 
change the Exchange will commence charging fees to Members and non-
members for certain physical ports used to connect to the Exchange's 
systems. The Exchange will implement the proposed rule change on the 
first day of the month immediately following Commission approval (or on 
the date of approval, if on the first business day of a month).
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    \3\ 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 on the Exchange's 
Web site at http://www.batstrading.com, on the Commission's Web site 
(http://www.sec.gov), at the Exchange's principal office, 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 those 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 purpose of the proposed rule change is to begin charging a 
monthly fee for physical ports used to connect to the Exchange's system 
for order entry and receipt of data from the Exchange. The Exchange 
recently began charging for ``logical'' ports used for order entry or 
receipt of Exchange data,\4\ but does not currently charge for the 
``physical'' ports needed to connect to the Exchange's system. A 
logical port is also commonly referred to as a TCP/IP port, and 
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. In contrast, a physical port is the port 
that is used by a Member or non-member to literally plug into the 
Exchange at the data centers where the Exchange's servers are located 
(i.e., either a cross-connection or a private line Ethernet connection 
to the Exchange's network within the data center). Multiple logical 
ports can be created for a single physical port.
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    \4\ See Release No. 34-60364 (July 22, 2009), 74 FR 37285 (July 
28, 2009) (File No. SR-BATS-2009-026).
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    The Exchange proposes to provide four (4) pairs \5\ of physical 
ports without charge to any Member or non-member that has been approved 
to connect to the Exchange. Due to the infrastructure costs associated 
with providing physical ports, the Exchange proposes to charge $2,000 
for each additional single physical port provided by the Exchange to 
any Member or non-member in any data center. Under the Exchange's 
current policy all physical ports are provided free of charge but 
Members and non-members are only permitted to establish up to 4 such 
physical port pairs. The Exchange's proposal is intended to permit 
those Members and non-members that wish to establish additional 
physical ports to do so if such constituent is willing to pay for such 
ports. Based on the proposal, the change applies to all Exchange 
constituents with physical connections, including Members that obtain 
ports for direct access to the Exchange, non-member service bureaus 
that act as a conduit for orders entered by Exchange Members that are 
their customers, Sponsored Participants, and market data recipients. 
Very few Members or other non-members require four physical ports for 
their operations related to the Exchange or would utilize more than 
four physical ports, and thus, the proposal should not affect many of 
the Exchange's constituents. However, the Exchange believes that 
Members and non-members that wish to pay for additional physical ports 
outside of those provided for free should have the ability to do so.
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    \5\ A ``pair'' of ports refers to one port at the site of the 
Exchange's primary data center (including the expansion space 
located adjacent to such data center) and one port at the site of 
the Exchange's secondary data center.
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2. Statutory Basis
    The rule change proposed in this submission 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(b) of the Act.\6\ Specifically, the 
Exchange believes that the proposed change is consistent with Section 
6(b)(4) of the Act,\7\ because it provides an equitable allocation of 
reasonable dues, fees, and other charges among its members and other 
persons using its facilities. The Exchange believes that its proposed 
physical port fees are reasonable in light of the benefits to Exchange 
Users of direct market access and receipt of data, which access and 
data can be accomplished without charge through the four physical port 
pairs provided free of charge or through other means of access not 
requiring physical ports (e.g., access through a virtual private 
network, or ``VPN'', connection). In addition, the Exchange believes 
that its fees are equitably allocated among its constituents as they 
are uniform in application to all Members and non-Members. The Exchange 
believes that fees for each single physical port over and above four 
free physical port pairs will enable it to cover its infrastructure 
costs associated with allowing constituents to establish additional 
physical ports to connect to the Exchange's systems.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 will 
result in

[[Page 1110]]

any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. Market participants 
will not be affected by the proposal unless such participants' 
technological needs are such that they wish to establish more than four 
physical connections to the Exchange. In addition, the Exchange 
believes that the proposed physical port fees are reasonable, 
especially in light of the 4 pairs of physical ports provided by the 
Exchange for free.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be 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-BATS-2009-032 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2009-032. 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 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 Number SR-BATS-2009-032 and should be 
submitted on or before January 29, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-70 Filed 1-7-10; 8:45 am]
BILLING CODE 8011-01-P