Document ID: SEC-2009-0508-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Change: BATS Exchange, Inc.
Posted Date: 2009-04-13T04:00Z

[Federal Register: April 13, 2009 (Volume 74, Number 69)]
[Notices]               
[Page 16899-16901]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap09-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59709; File No. SR-BATS-2009-008]

 
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 6, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 16900]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 31, 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. While changes to the fee schedule pursuant to this 
proposal will be effective upon filing, the changes will become 
operative on April 1, 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 April 1, 2009, in order to: (i) Reduce the 
rebate provided to Members who add liquidity to the Exchange in Tape A 
securities and Tape C securities from $0.0024 per share to $0.0023 per 
share; (ii) expand the securities for which the Exchange does not pay a 
rebate to all securities priced below $5.00, rather than securities 
priced below $1.00, and provide a rebate of $0.0001 per share for 
trades that remove liquidity in securities priced below $5.00; (iii) 
decrease the fee charged by the Exchange for its ``CYCLE'' routing 
strategy from $0.0029 per share to $0.0026 per share; and (iv) make 
modifications to certain of the Exchange's non-standard routing 
charges. In addition to these specific changes, which are discussed in 
further detail below, the Exchange has proposed additional 
modifications to its fee schedule for clarity. For instance, the 
Exchange has proposed re-ordering the list of non-standard routing 
changes, added language to certain headings to make clear the 
distinction between securities priced at $5.00 or above and below 
$5.00, and proposed modified language describing non-displayed 
liquidity and Modified Destination Specific Orders to more closely 
reflect the language typically used by Members of the Exchange. The 
Exchange has also proposed removing a descriptive chart that it 
previously included on its fee schedule.
(i) Reduction of Tape A and C Rebates
    The Exchange proposes to reduce the rebate provided to Members who 
add liquidity to the Exchange in Tape A and Tape C securities from 
$0.0024 per share to $0.0023 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.
(ii) Securities Priced Below $5.00
    The Exchange does not currently charge fees for removing liquidity 
nor does the Exchange provide a rebate for adding liquidity in any 
securities priced below $1.00. The Exchange proposes to expand the no-
rebate structure for liquidity adders to all securities priced below 
$5.00. In addition, the Exchange proposes to provide a rebate of 
$0.0001 per share for all orders that remove liquidity in securities 
priced below $5.00. The Exchange believes that this proposed fee 
structure, which differs depending on whether a security trades below 
$5.00 or at or above $5.00, will benefit both the Exchange and Members 
of the Exchange by encouraging market participants to send order flow 
in lower priced securities to the Exchange for execution, resulting in 
higher liquidity and better execution quality. In addition, the 
Exchange believes that the fee and rebate rates it proposes are 
reasonable.
(iii) Decrease of Standard Routing Fee
    The Exchange proposes to decrease the fee charged by the Exchange 
for its CYCLE routing strategy \5\ from $0.0029 per share to $0.0026 
per share. This proposed change reflects decreases recently made by 
certain other protected markets to their access fees.
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    \5\ The CYCLE routing strategy routes orders to any market 
center or execution venue other than a dark liquidity pool. Orders 
are routed to dark liquidity pools through the Exchange's DART 
routing strategy. Orders executed through DART cost $0.0020 per 
share, which the Exchange has not proposed to change at this time.
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(iv) Changes to Non-Standard Routing Charges
    As described below, the Exchange also proposes certain changes to 
the non-standard routing charges charged to Members. First, the 
Exchange proposes to modify the routing charges applicable to 
Destination Specific Orders sent to all market centers that display 
Protected Quotations \6\ (each a ``Protected Market Center'') other 
than the NYSE, NYSE Arca or NASDAQ, by increasing the standard charge 
for all such orders from $0.0029 per share to $0.0030 per share. 
Second, for Destination Specific Orders routed to NYSE, the Exchange 
proposes providing a discounted price from the NYSE's current removal 
fee of $0.0018 per share by charging $0.0017 per share for such orders. 
Third, with respect to Destination Specific Orders routed to NYSE Arca 
and NASDAQ, the Exchange will charge the lowest transaction fee 
currently available at such market centers in each Tape. Specifically, 
the Exchange will charge: (A) $0.0028 per share for Destination 
Specific orders executed at NYSE Arca; (B) $0.0026 per share for 
Destination Specific orders in Tape A securities and Tape C securities 
executed at NASDAQ; and (C) $0.0029 per share for Destination Specific 
orders in Tape B securities executed at NASDAQ. Finally, to be 
consistent with the change to the CYCLE routing fee described above, 
the Exchange proposes to charge 0.26%, rather than 0.29%, of the total 
dollar value of the execution for any security (all Tapes) priced under 
$1.00 per share that is routed away from the Exchange.
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    \6\ As defined in BATS Rule 1.5(s).
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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

[[Page 16901]]

are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6 of the Act.\7\ Specifically, the 
Exchange believes that the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\8\ 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 reduce its fees will benefit Members both 
due to the obvious economic savings and due to the potential of 
increased available liquidity at 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 A and C 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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    \7\ 15 U.S.C. 78f.
    \8\ 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 \9\ and Rule 19b-
4(f)(2) thereunder,\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(6) [sic].
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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--2009-008 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 No. SR-BATS-2009-008. 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-2009-008 and should be 
submitted on or before May 4, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8323 Filed 4-10-09; 8:45 am]

BILLING CODE 8010-01-P