Document ID: SEC-2014-0796-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Y-Exchange, Inc.
Posted Date: 2014-05-14T04:00Z

[Federal Register Volume 79, Number 93 (Wednesday, May 14, 2014)]
[Notices]
[Pages 27661-27662]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11031]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72127; File No. SR-BYX-2014-008]

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

May 8, 2014.
    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 April 29, 2014, 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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal 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 
are effective upon filing.
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    \5\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
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    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 May 1, 2014, in order to modify pricing 
related to executions that occur on NASDAQ OMX BX, Inc. (``NASDAQ BX'') 
through either a BYX + NASDAQ BX Destination Specific Order \6\ or 
through the Exchange's TRIM routing strategy.\7\ NASDAQ BX implemented 
certain pricing changes effective April 8, 2014, including modification 
from a highest potential rebate \8\ of $0.0013 per share when removing 
liquidity to a highest potential rebate of $0.0015 per share when 
removing liquidity.\9\ To maintain a direct pass through of the 
applicable economics for TRIM executions at NASDAQ BX (assuming the 
Exchange is able to achieve the highest potential rebate), the Exchange 
proposes to rebate $0.0015 per share for an order routed through its 
TRIM routing strategy and executed on NASDAQ BX, rather than the rebate 
of $0.0013 per share that it currently offers for such orders.
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    \6\ A ``Destination Specific Order'' is defined as a ``market or 
limit order that instructs the System to route the order to a 
specified away trading center or centers, after exposing the order 
to the BATS Book. Destination Specific Orders that are not executed 
in full after routing away are processed by the Exchange as 
described below in Rule 11.13(a)(2).'' BYX Rule 11.9(c)(12).
    \7\ The TRIM routing strategy is set forth in BYX Rule 
11.13(a)(3)(G).
    \8\ NASDAQ BX maintains a tiered pricing structure that results 
in variable rebates and fees depending on the amount of liquidity 
added or removed. See the Nasdaq BX Pricing List available at http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing (last visited April 
28, 2014).
    \9\ See Securities Exchange Act Release No. 71956 (April 16, 
2014), 79 FR 22565 (April 22, 2014) (SR-BX-2014-018) (Notice of 
Filing and Immediate Effectiveness).
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    Similarly, because NASDAQ BX is part of the Exchange's ``One Under/
Better'' pricing program for Destination Specific Orders, the Exchange 
intends to rebate $0.0001 per share more than if a Member executed an 
order directly on NASDAQ BX. Accordingly, the Exchange proposes to 
rebate $0.0016 per share for an order routed as a Destination Specific 
Order to NASDAQ BX and executed on NASDAQ BX, which is $0.0001 per 
share more than NASDAQ BX rebates directly. The Exchange's ``One Under/
Better'' pricing does not apply to securities priced below $1.00. In 
addition, the Exchange will maintain the pricing currently charged by 
the Exchange for all other Destination Specific Orders.
Implementation Date
    The Exchange proposes to implement these amendments to its fee 
schedule on May 1, 2014.
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 the 
proposed changes to certain of the Exchange's non-standard routing fees 
and strategies for orders routed to and executed on NASDAQ BX are 
equitably allocated,

[[Page 27662]]

fair and reasonable, and non-discriminatory in that they are equally 
applicable to all Members and are designed to mirror or provide an 
improvement over the rebate applicable to the execution if such routed 
orders were executed directly by the Member at NASDAQ BX.
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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 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. For orders 
routed through the Exchange and executed at NASDAQ BX through the TRIM 
routing strategy, the proposed fee change is designed to equal the 
rebate that a Member would have received if such routed orders would 
have been executed directly by a Member at NASDAQ BX.

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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
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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-BYX-2014-008 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-BYX-2014-008. 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 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 at 100 F Street NE., 
Washington, DC 20549-1090 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 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-
2014-008, and should be submitted on or before June 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
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    \14\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-11031 Filed 5-13-14; 8:45 am]
BILLING CODE 8011-01-P