Document ID: SEC-2009-0326-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2009-03-11T04:00Z

[Federal Register: March 11, 2009 (Volume 74, Number 46)]
[Notices]               
[Page 10625-10626]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11mr09-149]                         

[[Page 10625]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59516; File No. SR-BATS-2009-007]

 
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.

March 5, 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 March 2, 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. BATS 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its fee schedule applicable to use 
of the Exchange effective March 2, 2009.
    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 March 2, 2009, in order to: (i) Reduce the 
rebate provided to Members who add liquidity to the Exchange in Tape B 
securities from $0.0030 per share to $0.0028 per share; (ii) simplify 
the pricing for adding and removing non-displayed liquidity, as 
described in further detail below, by imposing standard fees and 
providing standard rebates rather than variable pricing based on trade 
size; and (iii) making modifications to certain of the Exchange's non-
standard routing charges.
(i) Reduction of Tape B Rebate
    The Exchange proposes to reduce the rebate provided to Members who 
add liquidity to the Exchange in Tape B securities from $0.0030 per 
share to $0.0028 per share. The Exchange believes that this proposed 
fee change is consistent with its long-term goal of providing access to 
the Exchange at competitive rates that do not expose the Exchange to 
significant losses or capital outlays. In addition, a $0.0028 per share 
rebate is consistent with the rebate for adding liquidity in Tape A and 
Tape C securities currently provided by the NASDAQ Stock Market LLC 
(``NASDAQ'') to NASDAQ members who are in the top volume tier for 
purposes of the NASDAQ fee schedule.\5\ The Exchange also proposes to 
add to its fee schedule a descriptive chart that depicts the standard 
fees charged and rebates provided for executions on the Exchange in 
Tape A, B, and C securities.
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    \5\ See NASDAQ Rule 7018(a)(1) and (2).
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(ii) Pricing for Non-Displayed Order Types
    The Exchange currently charges fees for removing non-displayed 
liquidity and provides rebates for adding non-displayed liquidity \6\ 
based on a pricing chart that varies depending on the size of the 
transaction (this pricing is referred to by the Exchange as ``Dark 
Match'' pricing on the current fee schedule). The Exchange proposes to 
simplify this pricing structure by: (i) Imposing a fee of $0.0025 per 
share for all orders that remove non-displayed liquidity, thus 
establishing a single rate for removal of any liquidity, and (ii) 
providing a rebate of $0.0020 per share for all orders that add non-
displayed liquidity. These are the same rates as the Exchange charges 
and rebates today for trades with a size between 1 and 500 shares. The 
Exchange believes that standardizing the Dark Match pricing structure 
will benefit both the Exchange and Members of the Exchange by 
alleviating confusion related to the Exchange's fees and rebates. In 
addition, the Exchange believes that the standard fee and rebate rates 
it proposes are reasonable.
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    \6\ Non-displayed order types subject to this pricing include 
all Pegged Orders, Mid-Point Peg Orders, and Non-Displayed Orders, 
which order types are described in BATS Rule 11.9. Reserve Orders 
and Discretionary Orders are not subject to this pricing.
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(iii) Changes to Non-Standard Routing Charges
    As described below, the Exchange also proposes certain changes to 
non-standard routing charges, in part, to account for changes made by 
other market centers. First, the Exchange proposes to simplify the 
routing charges applicable to Destination Specific Orders sent to all 
market centers that display Protected Quotations \7\ other than the 
NYSE (each a ``Protected Market Center''), by imposing a standard 
$0.0029 charge per share for all such orders. This change will make 
clear that all Destination Specific Orders routed to Protected Market 
Centers will be charged the same fee without reference to any 
exceptions, other than the exception for Destination Specific Orders 
routed to NYSE. The Exchange believes that more consistency for routing 
fees is preferable to a complicated fee structure with multiple varying 
rates. This change will result in an increase to the fee charged for 
Destination Specific Orders routed to NYSE Arca Equities (``NYSE 
Arca''), from $0.0028 per share to $0.0029 per share. This change is 
due to recently announced increases to the fees charged by NYSE 
Arca.\8\ Second, the Exchange proposes to increase the fee for 
Destination Specific Orders sent to NYSE from $0.0009 per share to 
$0.0019 per share. This change is due to recently announced increases 
to the fees charged by NYSE.\9\ The Exchange also proposes to delete a 
reference to Destination Specific Orders for ETFs sent to NYSE, because 
this distinction is no longer relevant; all Destination Specific Orders 
sent to NYSE will be charged a fee of $0.0019 per share. Third, the 
Exchange proposes to reduce the fee charged for routing of Directed 
ISO's from $0.0035

[[Page 10626]]

per share to $0.0033 per share. The Exchange is reducing its fee for 
such orders to encourage use of the Exchange's Directed ISO order 
types.
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    \7\ As defined in BATS Rule 1.5(s).
    \8\ In a joint notice distributed by email, NYSE and NYSE Arca 
notified their members of fee changes that are anticipated to become 
effective on March 1, 2009.
    \9\ See supra note 7.
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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.\10\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\11\ 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. The Exchange believes that its fees 
and credits are competitive with those charged by other venues and that 
the various changes it has proposed to simplify its fee schedule will 
benefit both the Exchange and Members of the Exchange. For those 
proposed changes that will result in increased fees charged to Members 
or lower rebates received by Members, such as the reduction of the 
rebate in Tape B securities, the Exchange believes that any additional 
revenue it receives will allow the Exchange to devote additional 
capital to its operations, which may, in turn, benefit Members of the 
Exchange. Finally, the Exchange believes that the proposed rates are 
equitable in that they apply uniformly to all Members.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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(B) Self-Regulatory Organization's Statement of 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 \12\ and Rule 
19b-4(f)(2) thereunder,\13\ 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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 proposal 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 No. SR-BATS-2009-007 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 No. SR-BATS-2009-007. 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 changes 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 such filing also will be available for 
inspection and copying at the principal office of BATS. 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-2009-007 and should be 
submitted on or before April 1, 2009.
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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\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-5206 Filed 3-10-09; 8:45 am]

BILLING CODE 8011-01-P