Document ID: SEC-2014-0650-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2014-04-18T04:00Z

[Federal Register Volume 79, Number 75 (Friday, April 18, 2014)]
[Notices]
[Pages 21986-21988]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08822]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71941; File No. SR-BATS-2014-011]

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.

April 14, 2014.
    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 April 1, 2014, 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

[[Page 21987]]

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). Changes to the fee schedule pursuant to this proposal 
are effective upon filing.
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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.

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 April 1, 2014, in order to modify the fees 
applicable to executions occurring through certain routing strategies 
at the Exchange's affiliate, BATS Y-Exchange, Inc. (``BYX'').
    BYX currently provides a base rebate of $0.0001 per share when 
removing liquidity. To create a direct pass through of the applicable 
economics of executions at BYX through the Destination Specific,\6\ 
TRIM (including TRIM2 and TRIM3),\7\ and SLIM \8\ routing strategies, 
the Exchange proposes to increase the rebate to $0.0016 per share for 
orders routed through such strategies and executed on BYX. The proposed 
change represents a pass through of the rate BATS Trading, Inc., the 
Exchange's affiliated routing broker-dealer, is provided for routing 
orders that remove liquidity from BYX. The proposed change is in 
response to BYX's April 2014 fee change where BYX increased its rebate 
from $0.0001 per share to $0.0016 per share for orders in securities 
priced at or above $1.00.\9\ Accordingly, when BATS Trading, Inc. 
routes to and removes liquidity on BYX, it will now receive a standard 
rebate of $0.0016 per share.\10\ The Exchange is not proposing any 
other changes to its routing fees at this time.
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    \6\ As defined in BATS Rule 11.9(c)(12).
    \7\ As defined in BATS Rule 11.13(a)(3)(G).
    \8\ As defined in BATS Rule 11.13(a)(3)(H).
    \9\ See the BYX Fee Schedule available at http://www.batstrading.com/resources/regulation/rule_book/BYX_Fee_Schedule.pdf.
    \10\ The Exchange notes that to the extent DE Route does or does 
not achieve any volume tiered rebates on BYX, its rebate for Flag BY 
will not change.
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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.\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. 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.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed changes to the Exchange's 
rebate for TRIM (including TRIM2 and TRIM3), SLIM and Destination 
Specific Orders executed on BYX are equitably allocated, fair and 
reasonable, and non-discriminatory in that they are equally applicable 
to all Members and are designed to mirror the rebate applicable to the 
execution if such routed orders were executed directly by the Member at 
BYX.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. 
Because the market for order execution is extremely competitive, 
Members may readily opt to disfavor the Exchange's routing services if 
they believe that alternatives offer them better value. For orders 
routed through the Exchange and executed at BYX through the TRIM 
(including TRIM2 and TRIM3), SLIM and Destination Specific Order 
strategies, the proposed fee change is designed to equal the rebate 
that a Member would have received if such routed orders would have been 
executed directly by a Member at BYX. As stated above, the Exchange 
notes that it operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues if the 
deem fee structures to be unreasonable or excessive.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\ 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 Number SR-BATS-2014-011 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 Number SR-BATS-2014-011. This 
file number should be included on the

[[Page 21988]]

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 Number SR-BATS-2014-011 and should be submitted on or before May 
9, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-08822 Filed 4-17-14; 8:45 am]
BILLING CODE 8011-01-P