Document ID: SEC-2010-1646-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2010-10-27T04:00Z

[Federal Register: October 27, 2010 (Volume 75, Number 207)]
[Notices]               
[Page 66170-66172]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc10-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63146; File No. SR-BATS-2010-030]

 
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.

October 21, 2010.
    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 October 14, 2010, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the 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 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.
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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 
Members\3\ of the Exchange pursuant to BATS Rules 15.1(a) and (c). 
While changes to the fee schedule pursuant to this proposal will be 
effective upon filing, the changes will become operative on October 15, 
2010.
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    \3\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify the ``Equities Pricing'' section of 
its fee schedule to adopt pricing for two new order routing strategies, 
named TRIM and SLIM, and for a Destination Specific Order sent to the 
Exchange's affiliate, BATS Y-Exchange, Inc. The Exchange also proposes 
to modify the ``Options Pricing'' section of its fee schedule to adopt 
pricing for Destination Specific orders routed to the new C2 Options 
Exchange. Finally, the Exchange proposes certain non-substantive 
changes related to the appearance of the fee schedule.
(i) Adoption of TRIM Pricing
    The Exchange proposes to adopt pricing for its new TRIM order 
routing strategy, which strategy is focused on seeking execution of 
orders while minimizing execution costs by routing only to certain low 
cost execution venues on the Exchange's System routing table. The 
Exchange proposes to rebate Members $0.0003 per share for TRIM orders 
routed to and executed by its affiliated exchange, BATS Y-Exchange, 
Inc. (``BYX''), which is the same rebate to be offered by BYX to market 
participants that route directly to and execute at BYX. For executions 
through TRIM routing that occur at a dark liquidity venue (identified 
by the Exchange as a ``DRT'' venue) or the NYSE, the Exchange proposes 
to charge $0.0020 per share. Finally, to the extent an order routed 
through TRIM executes at a low-priced venue other than BYX, a DRT venue 
or NYSE, the Exchange proposes neither to charge the Member

[[Page 66171]]

any fee nor to pay any rebate for such execution.
(ii) Adoption of SLIM Pricing
    The Exchange proposes to adopt pricing for its new SLIM order 
routing strategy, which, similar to TRIM, is focused on seeking 
execution of orders while minimizing execution costs by routing to 
certain low cost execution venues on the Exchange's System routing 
table. The primary distinction between TRIM and SLIM is that SLIM will 
route first to low cost execution venues but will ultimately route to 
all venues on the Exchange's System routing table, whereas TRIM only 
routes to low cost execution venues. As with TRIM, the Exchange 
proposes to rebate Members $0.0003 per share for SLIM orders routed to 
and executed by its affiliated exchange, BYX. For executions through 
SLIM routing that occur at the NYSE, the Exchange proposes to charge 
$0.0020 per share. Finally, to the extent an order routed through SLIM 
executes at any other venue, including any DRT venue, the Exchange 
proposes to charge $0.0026 per share.
(iii) Destination Specific Equities Routing to BYX
    The Exchange proposes to adopt pricing for a Destination Specific 
Order \4\ routed to and executed by its affiliated exchange, BYX. The 
Exchange proposes to refer to this routing as ``B2B'' routing, and 
proposes to rebate $0.0003 per share for B2B orders routed to and 
executed by BYX. As described above, this is the same rebate applicable 
to orders routed to BYX directly.
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    \4\ As defined in BATS Rule 11.9(c)(12).
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(iv) Destination Specific Options Routing to C2
    As set forth in the Options pricing section of the fee schedule, 
the Exchange currently charges flat rates for Customer, Firm and Market 
Maker transactions executed at away markets pursuant to Destination 
Specific Order \5\ routing strategies, which rates vary depending on 
the venue at which transactions execute.\6\ The Exchange has two 
distinct categories of options exchanges with ``Make/Take'' pricing.\7\ 
The first category of Make/Take pricing is proposed to apply to 
Destination Specific Orders executed at the International Stock 
Exchange (``ISE'') or NASDAQ OMX PHLX (``PHLX'') in issues for which 
Make/Take pricing applies. The fee for this first category of Make/Take 
markets is proposed as $0.20 per contract for Customer transactions and 
$0.50 per contract for Firm or Market Maker transactions. The Exchange 
proposes to add the soon to be operational C2 Options Exchange (``C2'') 
to this category of Destination Specific routing. The Exchange believes 
that Members will benefit from the simplicity of the pricing structure, 
and that C2 pricing will be most consistent with the pricing offered by 
ISE and PHLX in issues for which Make/Take pricing applies.
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    \5\ As defined in BATS Rule 21.1(d)(7).
    \6\ The current form of the Exchange's Destination Specific 
routing fees were recently adopted. See Securities Exchange Act 
Release No. 63085 (October 8, 2010) (SR-BATS-2010-026).
    \7\ As defined on the fee schedule, Make/Take pricing refers to 
executions at the identified Exchange under which ``Post Liquidity'' 
or ``Maker'' rebates (``Make'') are credited by that exchange and 
``Take Liquidity'' or ``Taker'' fees (``Take'') are charged by that 
Exchange.
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(v) Additional Changes
    In addition to the changes described above, the Exchange proposes 
adding additional headings to its fee schedule in order to maintain 
clear delineation between its equities and options pricing sections. 
The Exchange also proposes to move a footnote within the equities 
pricing section of the fee schedule to maintain its position at the 
bottom of the page in the version of the fee schedule maintained on its 
Web site.
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.\8\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\9\ 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. 
Finally, the Exchange believes that the proposed rates are equitable in 
that they apply uniformly to all Members.
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    \8\ 15 U.S.C. 78f.
    \9\ 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 imposes 
any burden on competition.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 \10\ and Rule 
19b-4(f)(2) thereunder,\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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    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. 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 Number SR-BATS-2010-030 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-BATS-2010-030. 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

[[Page 66172]]

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,\12\ 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, on official business days 
between the hours of 10 a.m. and 3 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-
BATS-2010-030 and should be submitted on or before November 17, 2010.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/rules/sro.shtml.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-27141 Filed 10-26-10; 8:45 am]
BILLING CODE 8011-01-P