Document ID: SEC-2016-0819-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats EDGX Exchange, Inc.
Posted Date: 2016-05-12T04:00Z

[Federal Register Volume 81, Number 92 (Thursday, May 12, 2016)]
[Notices]
[Pages 29598-29600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11155]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77780; File No. SR-BatsEDGX-2016-13]

Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change Related 
to Fees

May 6, 2016.
    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, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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 filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-members of the Exchange pursuant to EDGX Rules 
15.1(a) and (c).
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange determines the liquidity adding rebate that it will 
provide to Members using the Exchange's tiered pricing structure. 
Currently, the Exchange provides a $0.0027 per share rebate under 
footnote 2 of the Fee Schedule for a Member that adds an ADV \6\ of at 
least 0.02% of the TCV \7\ in Tape B securities for orders that yield 
fee codes B and 4.\8\ The Exchange currently has only one Tape B Volume 
Tier.
---------------------------------------------------------------------------

    \6\ As defined on the Exchange's Fee Schedule.
    \7\ Id.
    \8\ See Securities Exchange Act Release No. 76816 (January 4, 
2016, 81 FR 987 (January 8, 2016) (SR-EDGX-2015-67).
---------------------------------------------------------------------------

    The Exchange now proposes to amend the Tape B Volume Tier to add an 
additional Tape B Volume Tier to provide two Tape B Volume Tiers. The 
Exchange proposes that the current Tape B Volume Tier be renamed Tape B 
Volume Tier 1. The Exchange proposes that the rebate and the required 
criteria for Tape B Volume Tier 1 remain substantively the same as the 
current Tape B Volume Tier. The Exchange also proposes a second Tape B 
Volume Tier named ``Tape B Volume Tier 2.'' The Exchange proposes to 
provide a rebate per share of $0.0030 pursuant to the Tier and proposes 
the required criteria to be that a Member adds an ADV of at least 0.15% 
of the TCV in Tape B securities. To accommodate this proposed change in 
its Fee Schedule, the Exchange proposes adding an additional row to the 
Tape B Volume Tier table to list the Tape B Volume Tier 2. The Exchange 
also proposes adding an additional column to separate Tape B Volume 
Tier 1 and Tape B Volume Tier 2. Finally, the Exchange proposes stating 
as a precursor that both Tape B Volume

[[Page 29599]]

Tiers are applicable to orders yielding fee codes B and 4 and removing 
the same statement from the current text describing Tape B Volume Tier 
1.
Implementation Date
    The Exchange proposes to implement this amendment to its Fee 
Schedule effective May 2, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(4),\10\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange also 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 proposed rule changes reflect a competitive 
pricing structure designed to incent market participants to direct 
their order flow to the Exchange. The Exchange believes that the 
proposed amendments to the Tape B Volume Tier are equitable and non-
discriminatory in they would apply uniformly to all Members. The 
Exchange believes the rate remains competitive with those charged by 
other venues and, therefore, reasonable and equitably allocated to 
Members.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Volume-based rebates such as that proposed herein have been widely 
adopted by exchanges, including the Exchange, and are equitable because 
they are open to all Members on an equal basis and provide additional 
benefits or discounts that are reasonably related to: (i) The value to 
an exchange's market quality; (ii) associated higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns; and (iii) introduction of higher volumes of orders into the 
price and volume discovery processes. The Exchange believes that the 
proposal is a reasonable, fair and equitable, and not unfairly 
discriminatory allocation of fees and rebates because it will provide 
Members with an additional incentive to reach certain thresholds on the 
Exchange.
    In particular, the Exchange believes the addition of the proposed 
second, higher Tape B Volume Tier 2 is a reasonable means to encourage 
Members to increase the liquidity they provide on the Exchange. 
Further, Members will still be able to earn the currently offered 
rebate under Tape B Volume Tier 1. The addition of a second, higher 
tier merely incentivizes a Member to provide even greater liquidity. 
The Exchange further believes that the amendment to the Tape B Volume 
Tier represents an equitable allocation of reasonable dues, fees, and 
other charges because the thresholds necessary to achieve the tier 
continue to encourage Members to add displayed liquidity to the EDGX 
Book \11\ each month. The increased liquidity benefits all investors by 
deepening EDGX's liquidity pool, offering additional flexibility for 
all investors to enjoy cost savings, supporting the quality of price 
discovery, promoting market transparency and improving investor 
protection.
---------------------------------------------------------------------------

    \11\ The EDGX Book is the System's electronic file of orders. 
See Exchange Rule 1.5(d).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendment to its Fee 
Schedule would impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. The Exchange does not believe that the proposed 
additional tier would burden competition, but instead, enhances 
competition, as it is intended to increase the competitiveness of and 
draw additional volume to the Exchange. The Exchange does not believe 
the amended tier would burden intramarket competition as it would apply 
to all Members uniformly. Accordingly, the Exchange does not believe 
that the proposed change will impair the ability of Members or 
competing venues to maintain their competitive standing in the 
financial markets.

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 unsolicited 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-BatsEDGX-2016-13 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-BatsEDGX-2016-13. 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

[[Page 29600]]

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-BatsEDGX-2016-13, and should 
be submitted on or before June 2, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

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

[FR Doc. 2016-11155 Filed 5-11-16; 8:45 am]
 BILLING CODE 8011-01-P