Document ID: SEC-2012-0233-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2012-02-10T05:00Z

[Federal Register Volume 77, Number 28 (Friday, February 10, 2012)]
[Notices]
[Pages 7216-7218]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3094]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66327; File No. SR-BATS-2012-008]

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.

February 6, 2012.
    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 February 1, 2012, 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.
---------------------------------------------------------------------------

    \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 Substance 
of the Proposed Rule Change

    The Exchange proposes amend the fee schedule applicable to Members 
\5\ and non-members of the Exchange pursuant to BATS 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 February 
1, 2012.
---------------------------------------------------------------------------

    \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, 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 ``Equities Pricing'' section of 
its fee schedule in order to accommodate two additional variations of 
the Exchange's ``TRIM'' routing strategy. As defined in BATS Rule 
11.13(a)(3)(G), TRIM is a routing option under which an order

[[Page 7217]]

checks the System \6\ for available shares if so instructed by the 
entering User \7\ and then is sent to destinations on the System 
routing table. Accordingly, the Exchange's current TRIM routing 
strategy will optionally check the Exchange's order book and then route 
to various venues on the Exchange's routing table, including NASDAQ OMX 
BX, Inc. (``NASDAQ BX''), BATS Y-Exchange, Inc. (``BYX Exchange''), 
EDGA EXCHANGE, Inc. (``EDGA''), the New York Stock Exchange LLC 
(``NYSE'') and certain alternative trading systems available through 
the Exchange's ``DRT'' strategy (``DRT Venues'').\8\ In order to 
provide additional options related to the TRIM routing strategy to 
Exchange Users, the Exchange is introducing TRIM2 and TRIM3, both of 
which will route to fewer venues than the full list of TRIM routing 
venues.\9\ Specifically, TRIM2 will limit the routing table to NASDAQ 
BX, BYX Exchange, EDGA and DRT Venues. TRIM3 will further limit the 
routing table to NASDAQ BX, BYX Exchange and DRT Venues.
---------------------------------------------------------------------------

    \6\ As defined in BATS Rule 1.5(aa), the System is the 
electronic communications and trading facility designated by the 
Board through which securities orders of Users are consolidated for 
ranking, execution and, when applicable, routing away.
    \7\ As defined in BATS Rule 1.5(cc), a User is any Member or 
Sponsored Participant who is authorized to obtain access to the 
System pursuant to Rule 11.3.
    \8\ As set forth in BATS Rule 11.13(a)(3)(E), DRT is a routing 
option in which the entering firm instructs the System to route to 
alternative trading systems included in the System routing table. 
Unless otherwise specified, DRT can be combined with and function 
consistent with all other routing options.
    \9\ See also SR-BATS-2012-007, available at www.batstrading.com/regulation.
---------------------------------------------------------------------------

    All pricing currently applicable to the TRIM routing strategy will 
apply to TRIM2 and TRIM3, with the exception of TRIM2 and TRIM3 orders 
executed at NASDAQ BX. In order to fund the development and 
infrastructure cost of creating and maintaining additional TRIM routing 
strategies, the Exchange proposes to provide a lower rebate for 
executions pursuant to TRIM2 and TRIM3 than the rebate actually 
received for orders executed at NASDAQ BX, which are passed on in full 
for executions resulting from TRIM routing. Specifically, the Exchange 
proposes to provide a rebate of $0.0010 per share for executions at 
NASDAQ BX that result from TRIM2 or TRIM3 routing, rather than the full 
rebate of $0.0014 per share.
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 also notes that with 
respect to the changes proposed in this filing, although routing 
options are available to all Users, Users are not required to use the 
Exchange's routing services, but instead, the Exchange's routing 
services are completely optional. Members can manage their own routing 
to different venues or can utilize a myriad of other routing solutions 
that are available to market participants.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rebates and fees for the 
TRIM2 and TRIM3 routing options for the Exchange are reasonable in that 
they are equivalent to the fees charged by the Exchange for the TRIM 
routing strategy, with the exception of executions at NASDAQ BX, as 
described above. As such, the Exchange believes that the proposed non-
standard routing fees are competitive, fair and reasonable, and non-
discriminatory in that they are generally designed to mirror the rebate 
or fee applicable to the execution if such routed orders were executed 
directly by the Member at each applicable venue. The Exchange believes 
that the slightly lower rebate provided for TRIM2 and TRIM3 executions 
at NASDAQ BX is reasonable in order to help the Exchange cover the cost 
of developing and maintaining additional routing strategies for Users 
of the Exchange. The Exchange also believes that the proposed rebates 
and fees for TRIM2 and TRIM3 are fair and equitable and not 
unreasonably discriminatory in that they apply equally to all Exchange 
Users.

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 on 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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 19b-
4(f)(2) thereunder,\13\ the Exchange has designated this proposal as 
establishing or changing a due, fee, or other charge applicable to the 
Exchange's Members and non-members, which renders the proposed rule 
change effective upon filing.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-BATS-2012-008 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-2012-008. 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

[[Page 7218]]

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 will also 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-2012-008 and should be submitted on or before March 2, 
2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3094 Filed 2-9-12; 8:45 am]
BILLING CODE 8011-01-P