
[Federal Register Volume 78, Number 169 (Friday, August 30, 2013)]
[Notices]
[Pages 53814-53816]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21187]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70257; File No. SR-BATS-2013-047]


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

August 26, 2013.
    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 August 16, 2013, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') 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 Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend Rule 2.5, entitled 
``Restrictions,'' to include the Regulatory Fees that will be charged 
to certain registered persons at the Exchange for the proficiency 
examination and continuing education (``CE'') requirements under the 
Rule. Changes to Exchange fees 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
    The Exchange proposes to add Interpretation and Policy .01(j) to 
Rule 2.5 to include the examination fee that will be charged to 
individuals that choose to complete the Proprietary Traders 
Qualification Examination (``Series 56''). Specifically, the Exchange 
is proposing to add a $195 examination fee for this examination. The 
Exchange also proposes to add Interpretation and Policy .02(f) to Rule 
2.5 to include a $60 session fee for those individuals that must 
complete the S501 Series 56 Proprietary Trader Continuing Education 
Program (``S501'').
Examination Fee
    Recently, the Exchange amended Interpretation and Policy .01(f) to 
Rule 2.5 to include the registration and qualification requirements for 
persons registered as Proprietary Traders with the Exchange.\5\ Under 
this provision, those who wish to register as a Proprietary Trader with 
the Exchange must complete the Series 56 examination. Thus, the 
Exchange is proposing to include the $195 fee that will be charged to 
individuals who wish to complete this examination. This fee will be 
collected with [sic] the administrator of the Series 56, which is 
currently FINRA. The Exchange will not invoice or collect this fee.
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    \5\ See SR-BATS-2013-046 (filed Aug. 15, 2013), available at 
http://www.batstrading.com/regulation/rule_filings/bzx.
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    Rule 2.5 does not currently set forth the examination fees for 
other qualification examinations required or accepted by the Exchange 
because these programs are within the jurisdiction of the Financial 
Industry Regulatory Authority (``FINRA''), which collects these 
examination fees from its members. The Series 56, however, applies to 
Exchange Members that are not required by Section 15(b)(8) \6\ of the 
Act to become FINRA Members. Therefore, [sic] Exchange believes it is 
appropriate to include the Series 56 examination fee within Rule 2.5 to 
make the cost of this examination clear to Exchange Members. The 
examination fee is designed to reflect the costs of maintaining and 
developing the Series 56 and to ensure that the examination's content 
is and continues to be adequate for testing the competence and 
knowledge generally applicable to proprietary trading.
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    \6\ 15 U.S.C. 78o(b)(8).
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Continuing Education Fees
    Interpretation and Policy .02(a) to Rule 2.5 requires all 
Registered Representatives to complete the Regulatory Element of the CE 
program beginning with the ``occurrence of their second registration 
anniversary date and every three years thereafter or as otherwise 
prescribed by the Exchange.'' Recently, the Exchange amended 
Interpretation and Policy .02 to enumerate the different CE programs 
appropriate for each category of registration with the Exchange.\7\ The 
Exchange is now proposing to outline the necessary fees associated with 
the Regulatory Element of the S501.\8\
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    \7\ Id. [sic]
    \8\ The Exchange has assisted with the development of, and plan 
to administer, the Series 56 and S501 along with the following 
participating self-regulatory organizations: BATS Y-Exchange, Inc., 
Chicago Board Options Exchange (``CBOE''), C2 Options Inc. (``C2''), 
the Chicago Stock Exchange, Inc., the New York Stock Exchange, LLC, 
NYSE Arca, Inc., NYSE Amex, LLC, the NASDAQ Stock Market LLC, the 
National Stock Exchange, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, 
LLC, EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, Inc. (``EDGX''), 
International Securities Exchange, LLC, and BOX Options Exchange, 
LLC.
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    The Exchange has determined that this fee change is necessary to 
administer the Series 56 CE program. Specifically, the $60 session fee 
will be used to fund the CE program administered to Proprietary Traders 
that have a Series 56 registration and are required to complete the 
S501. The Exchange believes the $60 fee is reasonable and proportional 
based upon the programming of the CE. In addition,

[[Page 53815]]

the $60 fee will only be used for the administration of the CE, while 
the costs associated with the development of the S501 are included in 
the examination fee. Like the examination fee for the Series 56, the 
S501 fee will be collected by the administrator of the Program, which 
is currently FINRA. The Exchange will not invoice or collect this fee. 
The Exchange is not proposing to include the CE fees for the other CE 
programs enumerated in the Rule. Like the registration examinations, 
these CE programs are within FINRA's jurisdiction and FINRA collects 
the session fees from its members.
    Because the CE element is separate and different from the CE 
programs already administered, the proposed change would put Registered 
Representatives on notice of the associated fees. The proposed fee 
would also allow the Exchange to fund the S501, which is more tailored 
to the Series 56 registration. In addition, the Exchange believes other 
exchanges will be assessing the same fee for this CE program. The 
proposed changes are to take effect on August 19, 2013.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(5) of the Act,\10\ which requires that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, and processing information with respect to, and facilitation 
of transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) requirement that the rules of an 
exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.\11\ The proposed changes 
fulfill this requirement because the fees are allocated to all 
individuals who have or wish to have a Series 56 registration. The 
proposed fees are reasonably designed to allow FINRA to cover its cost 
of administering the Series 56 examination program on behalf of the 
Exchange. The fee for the Series 56 examination is greater than the fee 
for the CE program because the examination fee is also designed to 
cover the costs associated with developing both the Series 56 
examination and the related S501. The S501 fee is meant only to cover 
the costs of administering the CE sessions. The Exchange notes that it 
will not invoice or collect funds from Members that are subject to 
these fees because these fees will be paid directly to FINRA. The 
Exchange and the current administrator of the examination and CE 
program, FINRA, incur costs in maintaining and developing the 
examination and CE program to ensure the content is and continues to be 
adequate for testing the competence and knowledge generally applicable 
to proprietary trading. The Exchange believes it is reasonable and 
equitable to include these fees in Interpretations and Policies .01(j) 
and .02(f) to make the costs of the Series 56 and its related CE 
requirement clear to Members. Moreover, the Exchange believes other 
exchanges will be assessing the same fees for this examination and 
related CE program.\12\
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    \11\ Id.
    \12\ CBOE, C2, EDGX, and EDGA have already assessed this $60 
fee. Securities Exchange Act Release No. 70064 (July 30, 2013), 78 
FR 47469 (Aug. 5, 2013) (SR-CBOE-2013-078); Securities Exchange Act 
Release No. 70194 (Aug. 14, 2013) (SR-C2-2013-030); Securities 
Exchange Act Release No. 70162 (Aug. 12, 2013) (SR-EDGX-2013-31); 
Securities Exchange Act Release No. 70163 (Aug. 12, 2013) (SR-EDGA-
203-24 [sic]). EDGX and EDGA have also already assessed the $195 
examination fee. Securities Exchange Act Release No. 70162 (Aug. 12, 
2013) (SR-EDGX-2013-31); Securities Exchange Act Release No. 70163 
(Aug. 12, 2013) (SR-EDGA-203-24 [sic]).
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    Finally, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\13\ which requires that the 
Exchange be organized and have the capacity to be able to carry out the 
purposes of the Act such that it can enforce compliance with the Act by 
persons registered with the Exchange. As previously discussed, the 
proposed rule change is designed to fund the administration of the 
Series 56 and S501. Thus, the proposed rule change will help the 
Exchange enforce compliance with the Act and Exchange Rules by those 
persons registered as Proprietary Traders.
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    \13\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. In particular, the proposed 
rule change will not impose any burden on intermarket competition 
because it will merely serve to aid the Exchange in fulfilling its 
obligations as a Self-Regulatory Organization by funding the 
administration of the Series 56 and S501. The proposed rule change will 
not impose any burden on intramarket competition because all Registered 
Representatives are required to pass a qualification examination and 
fulfill the appropriate CE requirement as outlined in Interpretations 
and Policies .01 and .02 of Rule 2.5, and the fees for the Series 56 
and S501 will apply uniformly to all Members. In addition, as noted 
above, the Exchange believes other exchanges will be assessing the same 
fees for the Series 56 and related CE program to be collected by FINRA.

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 rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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-BATS-2013-047 on the subject line.

[[Page 53816]]

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-2013-047. 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 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-2013-047 and should be 
submitted on or before September 20, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21187 Filed 8-29-13; 8:45 am]
BILLING CODE 8011-01-P


