Document ID: SEC-2012-1335-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Y-Exchange, Inc.
Posted Date: 2012-08-14T04:00Z

[Federal Register Volume 77, Number 157 (Tuesday, August 14, 2012)]
[Notices]
[Pages 48578-48580]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19860]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67622; File No. SR-BYX-2012-017]

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

August 8, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 31, 2012, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'') 
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 to amend the fee schedule applicable to 
Members \5\ and non-members of the Exchange pursuant to BYX Rules 
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal 
will be effective upon filing.
---------------------------------------------------------------------------

    \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

[[Page 48579]]

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 in order to remove 
a venue currently included as part of the Exchange's ``TRIM'' routing 
strategy, as described in further detail below.
    The Exchange proposes to modify its fee schedule in order to remove 
a specific venue from the Exchange's ``TRIM'' routing strategy. As 
defined in BYX Rule 11.13(a)(3)(G), TRIM is a routing option under 
which an order checks the System \6\ for available shares and then is 
sent to destinations on the System routing table. The TRIM routing 
strategy is focused on seeking execution of orders while minimizing 
execution costs by routing to certain low cost execution venues on the 
Exchange's routing table. Accordingly, the Exchange's current TRIM 
routing strategy will 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''), EDGA EXCHANGE, Inc. (``EDGA''), the New York 
Stock Exchange LLC (``NYSE''), BATS Exchange, Inc. (``BZX Exchange'') 
and certain alternative trading systems available through the 
Exchange's ``DRT'' strategy (``DRT Venues'').\7\ Effective July 2, 
2012, NASDAQ OMX PSX (``NASDAQ PSX''), began to provide free executions 
to participants that met certain volume criteria. The Exchange, in 
turn, added NASDAQ PSX to the TRIM routing strategy as a low cost 
execution venue beginning July 2, 2012. According to a recently 
announced change, as of August 1, 2012, NASDAQ PSX will charge 
participants $0.0019 per share to remove liquidity from its order book 
in Tape A securities and $0.0027 per share to remove liquidity from its 
order book in Tape B and C securities, rather than continuing to 
provide executions free of charge.\8\ Based on this fee increase, the 
Exchange no longer believes that NASDAQ PSX should be included in the 
TRIM routing strategy.
---------------------------------------------------------------------------

    \6\ As defined in BYX 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 set forth in BYX 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.
    \8\ See Equity Trader Alert 2012-31 (July 30, 2012). 
This change was recently announced and will become operative on 
August 1, 2012.
---------------------------------------------------------------------------

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.\9\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\10\ 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 routing changes proposed in this filing, although 
routing options are available to all Users,\11\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ As defined in BYX 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.
---------------------------------------------------------------------------

    The Exchange believes that removing NASDAQ PSX from the TRIM 
routing option is reasonable in that NASDAQ PSX will no longer provide 
executions free of charge, as described above. As such, the Exchange 
believes that the proposed change to remove NASDAQ PSX from the TRIM 
routing option is a fair and reasonable and equitable allocation of 
fees in that it is consistent with the goal of routing to low cost 
execution venues. The Exchange also believes that the proposed change 
to the TRIM routing strategy is fair and equitable and not unreasonably 
discriminatory in that it will 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 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. The proposed 
change is designed to ensure that the TRIM routing strategy efficiently 
focuses on low cost execution venues, thereby allowing it to remain 
competitive.

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.

[[Page 48580]]

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-BYX-2012-017 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-BYX-2012-017. 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 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 the 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-BYX-2012-017 and should be 
submitted on or before September 4, 2012.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19860 Filed 8-13-12; 8:45 am]
BILLING CODE 8011-01-P