Document ID: SEC-2014-1808-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2014-10-29T04:00Z

[Federal Register Volume 79, Number 209 (Wednesday, October 29, 2014)]
[Notices]
[Pages 64434-64436]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25668]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73414; File No. SR-BATS-2014-050]

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.

October 23, 2014.
    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 October 16, 2014, BATS Exchange, Inc. (the ``Exchange'' or ``BATS 
'') filed with the Securities and Exchange Commission (``Commission'') 
a proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit

[[Page 64435]]

comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fees applicable to 
securities listed on the Exchange pursuant to BATS Rule 14.13. Changes 
to the fee schedule pursuant to this proposal are effective upon 
filing.
    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
    On August 30, 2011, the Exchange received approval of rules 
applicable to the qualification, listing, and delisting of companies on 
the Exchange,\3\ which it modified on February 8, 2012 in order to 
adopt pricing for the listing of exchange traded products (``ETPs'' \4\ 
on the Exchange,\5\ which it subsequently modified again on June 4, 
2014.\6\ The Exchange proposes to modify Rule 14.13, entitled ``Company 
Listing Fees'' to eliminate the annual fees for ETPs that are not 
participating in the competitive liquidity provider program under 
Interpretation and Policy .02 to Rule 11.8 (the ``CLP Program'').\7\ 
The Exchange is not proposing to eliminate the $5,000 application fee 
for ETPs. For ETPs that are participating in the CLP Program, the 
Exchange proposes that the annual fees continue to be $35,000. In 
conjunction with the proposed elimination of annual fees for ETPs 
listed on the Exchange, the Exchange is also planning to file a 
separate proposal that will eliminate enhanced rebates for lead market 
makers (``LMMs'') in LMM Securities \8\ under the Exchange's LMM 
Program,\9\ which was in part subsidized by the annual listing fees.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 65225 (August 30, 
2011) 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
    \4\ As defined in BATS Rule 11.8(e)(1)(A), the term ``ETP'' 
means any security listed pursuant to Exchange Rule 14.11.
    \5\ See Securities Exchange Act Release No. 66422 (February 17, 
2012) 77 FR 11179 (February 24, 2012) (SR-BATS-2012-010).
    \6\ See Securities Exchange Act Release No. 72377 (June 12, 
2014) 79 FR 34822 (June 18, 2014) (SR-BATS-2014-024).
    \7\ The Exchange notes that the CLP Program referenced in this 
proposal will be discontinued as of December 31, 2014. The 
references to the CLP Program herein do not apply to the Exchange's 
Supplemental CLP Program for ETPs, which is defined in 
Interpretation and Policy .03 to Rule 11.8.
    \8\ As defined in Rule 11.8(e)(1)(C), LMM Security means an ETP 
that has an LMM.
    \9\ See BATS Rule 11.8(e).
---------------------------------------------------------------------------

    Currently, Rule 14.13(b)(2)(C) provides that the annual fee for an 
ETP that is not participating in the CLP Program is charged quarterly 
on a tiered basis based on the ETP's consolidated average daily volume 
(the ``CADV''), as defined below, during the quarter preceding the 
billing date. Specifically, the Exchange charges issuers of ETPs on a 
quarterly basis as follows:

------------------------------------------------------------------------
                                                    Quarterly    Annual
                       CADV                            fee         fee
------------------------------------------------------------------------
0-10,000.........................................       $1,250    $5,000
10,001-40,000....................................        2,000     8,000
40,001-80,000....................................        3,000    12,000
80,001-150,000...................................        3,750    15,000
150,001-400,000..................................        4,500    18,000
Greater than 400,000.............................        (\1\)     (\1\)
------------------------------------------------------------------------
\1\ Free.

    As mentioned above, the Exchange is proposing to eliminate all 
annual fees for ETPs that are not participating in the CLP Program, 
which includes the fees associated with each of the CADV tiers above. 
Specifically, the Exchange is proposing that issuers of each class of 
securities that is a domestic or foreign issue listed on the Exchange 
as an ETP that is not currently participating in the CLP Program will 
pay no annual fee to the Exchange.
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) and 6(b)(5) of the Act,\11\ in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among issuers and it does not unfairly discriminate 
between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange is proposing to eliminate all annual listing fees for 
ETPs listed on the Exchange, except for those ETPs that are 
participating in the CLP Program, which will significantly reduce 
listing fees for most new issuers and transfer listings in ETPs (with 
the exception of ETPs with a CADV greater than 400,000 for which there 
already was no annual listing fee), which the Exchange believes is 
equitable, reasonable, and non-discriminatory because the annual fee 
for listings will be applied equally to all ETPs newly listed on the 
Exchange. Further, there are currently no ETPs listed on the Exchange 
that are receiving the pricing for having a CADV of greater than 
400,000. The Exchange also believes that continuing to charge $35,000 
annually for ETPs that continue to participate in the CLP Program is 
equitable and non-discriminatory because the costs associated with 
operating the CLP Program are significantly higher than the anticipated 
costs associated with the listing of ETPs on the Exchange that are not 
participating in the CLP Program and are generally designed to at least 
in part offset the costs to the Exchange to operate the CLP Program. 
Further, ETPs participating in the CLP Program may opt out of the CLP 
Program at any time in order to be eligible for having no annual 
listing fees.
    Based on the foregoing, the Exchange believes that its proposed 
elimination of annual fees for ETPs that are not participating in the 
CLP Program is a reasonable, equitable, and non-discriminatory 
allocation of fees to issuers.

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. With 
respect to the proposed new pricing for the listing of ETPs, the 
Exchange does not believe that the changes burden competition, but 
instead, enhance competition, as it is intended to increase the 
competitiveness of the Exchange's listings program by allowing the

[[Page 64436]]

Exchange to offer ETPs the ability to list on the Exchange without 
having to pay any annual fees. As such, the proposal is a competitive 
proposal that is intended to attract additional ETP listings, which 
will, in turn, benefit the Exchange and all other BATS-listed ETPs.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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 \12\ and paragraph (f) of Rule 19b-4 
thereunder\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2014-050 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-2014-050. 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 such filing also will be available 
for inspection and copying at the principal offices 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-2014-050, 
and should be submitted on or before November 19, 2014.
    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. 2014-25668 Filed 10-28-14; 8:45 am]
BILLING CODE 8011-01-P