
[Federal Register Volume 79, Number 75 (Friday, April 18, 2014)]
[Notices]
[Pages 21975-21977]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08823]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71940; File No. SR-BYX-2014-005]


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

April 14, 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 1, 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.
---------------------------------------------------------------------------

    \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 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.
---------------------------------------------------------------------------

    \5\ A Member is any registered broker or dealer that has been 
admitted to membership in the Exchange.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site

[[Page 21976]]

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 recently amended its fee schedule, effective April 1, 
2014, to modify the rebates it provides for orders that remove 
liquidity and the fees it charges to add liquidity.\6\ Specifically, 
the Exchange adopted a standard rebate of $0.0015 per share for all 
orders that remove liquidity in securities priced $1.00 and above, with 
the exception of Mid-Point Peg Order \7\ liquidity (``Mid-Point Peg 
liquidity''). For executions that add displayed liquidity in securities 
priced $1.00 or above, the Exchange adopted a standard liquidity adding 
fee of $0.0017 per share, subject to reduced fees for Members that 
qualify for tiered pricing based on volume added to the Exchange.
---------------------------------------------------------------------------

    \6\ See SR-BYX-2014-004, available at http://batstrading.com/regulation/rule_filings/byx/.
    \7\ As defined in Exchange Rule 11.9(c)(9).
---------------------------------------------------------------------------

    The Exchange proposes to increase both the standard rebate to 
remove liquidity and the standard fee to add displayed liquidity by 
$0.0001 per share. Thus, for executions that remove liquidity in 
securities priced $1.00 and above, with the exception of Mid-Point Peg 
liquidity, the Exchange proposes to increase the standard rebate of 
$0.0015 per share to $0.0016 per share. For executions that add 
displayed liquidity in securities priced $1.00 or above, the Exchange 
proposes to increase the standard liquidity adding fee of $0.0017 per 
share to $0.0018 per share, subject to reduced fees for Members that 
qualify for tiered pricing based on volume added to the Exchange. The 
Exchange does not propose any other changes to the recently adopted 
changes.
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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The changes to Exchange execution fees and rebates proposed by this 
filing are intended to attract order flow to the Exchange by continuing 
to offer competitive pricing while also allowing the Exchange to 
continue to offer incentives to provide aggressively priced displayed 
liquidity.
    With respect to the proposed changes to the pricing structure for 
removing liquidity from the Exchange, the Exchange believes that its 
proposal is reasonable because the change provides only a slight 
additional increase to the recently adopted changes. The Exchange also 
believes that the rebate for removing liquidity in securities priced 
$1.00 or above are reasonable and equitably allocated because the 
proposed changes will increase the rebate for all orders that remove 
liquidity (other than orders that remove Mid-Point Peg liquidity). The 
proposed rebates are equitably allocated and not unfairly 
discriminatory because the rebates will apply equally to all Members.
    With respect to the slight increase to the fees charged to add 
displayed liquidity in securities priced $1.00 or above, the Exchange 
believes that the proposed fees are reasonable, equitably allocated and 
not unfairly discriminatory as they are designed to attract additional 
removing liquidity to the Exchange. So, while the Exchange is proposing 
to increase fees on a per share basis, it is simultaneously providing 
higher rebates to all Members for removing liquidity. Thus, although 
the change increases the fee for orders that provide liquidity, it 
provides an offsetting increase in the rebate for orders removing 
liquidity. The tiered pricing structure and reduced fees for Members 
that qualify are equitably allocated and not unfairly discriminatory 
for the reasons described when the pricing structure was adopted.\10\
---------------------------------------------------------------------------

    \10\ See supra note 6.
---------------------------------------------------------------------------

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 choose to preference other market centers ahead of the 
Exchange if they believe that they can receive better fees or rebates 
elsewhere. Further, such changes are necessarily competitive because 
they are intended to provide incentives to Members that will result in 
increased activity on the Exchange.
    The Exchange also believes that its pricing for removing liquidity 
is appropriately competitive vis-[agrave]-vis the Exchange's 
competitors, with at least one such competitor, NASDAQ OMX BX, Inc. 
(``NASDAQ BX''), offering a similar pricing model.\11\ In a competitive 
environment, the Exchange must continually adjust its fees to remain 
competitive with other exchanges and alternative liquidity sources. 
Because competitors are free to modify their own fees in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which fee changes 
in this market may impose any burden on competition is extremely 
limited. The proposed changes are, in fact, a direct response to an 
adjustment by NASDAQ BX in response to the Exchange's recent change to 
its pricing structure.\12\ Thus, the modifications described herein are 
a direct response to competition, which should be viewed as a positive 
signal that a competitive market exists. If the changes are 
unattractive to market participants, it is likely that the Exchange 
will lose market share as a result. Accordingly, the Exchange does not 
believe that the proposed changes will impair the ability of Members or 
competing order execution venues to maintain their competitive standing 
in the financial markets. Finally, the Exchange does not believe that 
any of

[[Page 21977]]

the changes represent a significant departure from previous pricing 
offered by the Exchange or pricing offered by the Exchange's 
competitors.
---------------------------------------------------------------------------

    \11\ See NASDAQ BX Pricing List available at http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing.
    \12\ See Nasdaq Equity Trader Alert 2014-28 available 
at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2014-28.
---------------------------------------------------------------------------

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

    No written comments were solicited or received.

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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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-BYX-2014-005 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-2014-005. 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-BYX-2014-005 and should be 
submitted on or before May 9, 2014.
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-08823 Filed 4-17-14; 8:45 am]
BILLING CODE 8011-01-P


