Document ID: SEC-2010-1759-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2010-11-17T05:00Z

[Federal Register Volume 75, Number 221 (Wednesday, November 17, 2010)]
[Notices]
[Pages 70326-70328]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28896]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63300; File No. SR-BATS-2010-031]

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

November 10, 2010.
    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 October 29, 2010, BATS Exchange, Inc. (the ``Exchange,'' ``BZX 
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.
---------------------------------------------------------------------------

    \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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to modify its fee schedule applicable to 
Members \5\ of the Exchange pursuant to BZX 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 November 1, 
2010.
---------------------------------------------------------------------------

    \5\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
---------------------------------------------------------------------------

    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, on the Commission's Web site at http://www.sec.gov, and at 
the Commission's Public Reference Room.

[[Page 70327]]

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 ``Equities Pricing'' section of 
its fee schedule to increase its standard fee for removing liquidity 
from the Exchange to $0.0028 per share and to increase its standard 
rebate for adding displayed liquidity to the Exchange to $0.0027 per 
share. The Exchange does not propose to charge different fees or grant 
different rebates depending on the amount of orders submitted to, and/
or trades executed on or through, the Exchange. Accordingly, all fees 
and rebates described below are applicable to all Members, regardless 
of the overall volume of their trading activities on the Exchange.
    Consistent with the current fee to remove liquidity, the charge per 
share for executions that remove liquidity from the Exchange will not 
apply [sic] executions that remove liquidity in securities priced under 
$1.00 per share. The fee for such executions will remain at 0.10% of 
the total dollar value of the execution. Similarly, as is currently the 
case for the rebate for adding liquidity to the Exchange, there will be 
no liquidity rebate for adding liquidity in securities priced under 
$1.00 per share. Finally, the rebate paid by the Exchange for adding 
non-displayed liquidity will remain at $0.0020 per share. As defined on 
the Exchange's current fee schedule, ``non-displayed liquidity'' 
includes liquidity resulting from all forms of Pegged Orders,\6\ Mid-
Point Peg Orders,\7\ and Non-Displayed Orders,\8\ but does not include 
liquidity resulting from Reserve Orders \9\ or Discretionary 
Orders.\10\
---------------------------------------------------------------------------

    \6\ As defined in BZX Rule 11.9(c)(8).
    \7\ As defined in BZX Rule 11.9(c)(9).
    \8\ As defined in BZX Rule 11.9(c)(11).
    \9\ As defined in BZX Rule 11.9(c)(1).
    \10\ As defined in BZX Rule 11.9(c)(10).
---------------------------------------------------------------------------

    In addition to the changes described above, and to differentiate 
itself from its affiliate, BATS Y-Exchange, Inc. (``BYX Exchange''), 
which recently commenced operations, the Exchange proposes to use the 
name ``BZX Exchange'' and ``BZX'' throughout the fee schedule, other 
than when referring to its equity options platform, which it will refer 
to as ``BATS Options.'' Similarly, the Exchange proposes defining its 
affiliate, as it has done above, as ``BYX Exchange.'' Also, the 
Exchange proposes to make stylistic changes, including referring to its 
book of orders as its ``order book,'' rather than just its ``book.'' 
Finally, the Exchange proposes to remove one heading from its fee 
schedule, ``Options Pricing (Continued),'' which is no longer necessary 
for the printed version of its fee schedule.
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.\11\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The impact of the proposed price changes upon the net fees paid by 
a particular market participant will depend upon a number of variables, 
including the prices of the market participant's quotes and orders 
relative to the national best bid and offer (i.e., its propensity to 
add or remove liquidity), the types of securities that it trades and 
its usage of non-displayed quotes/orders. While Members that generally 
remove liquidity from the Exchange will be paying a higher fee, the 
Exchange believes that such Members will benefit to the extent the 
higher rebate paid by the Exchange for adding liquidity attracts 
additional liquidity and thus improves the depth of liquidity available 
on the Exchange.
    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 its fees and credits are competitive with 
those charged by other venues. Finally, the Exchange believes that the 
proposed rates are equitable in that they apply uniformly to all 
Members.

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 Regarding 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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \13\ and Rule 
19b-4(f)(2) thereunder,\14\ because it establishes or changes a due, 
fee or other charge imposed on members by the Exchange. Accordingly, 
the proposal is effective upon filing with the Commission.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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.

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-2010-031 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission,

[[Page 70328]]

100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2010-031. 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 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 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 publicly available. All submissions 
should refer to File Number SR-BATS-2010-031 and should be submitted on 
or before December 8, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28896 Filed 11-16-10; 8:45 am]
BILLING CODE 8011-01-P