
[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9828-9837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03656]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74285; File No. SR-BATS-2015-11]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish Fees for the BATS One Feed, and Amend Fees for BZX Top and 
BZX Last Sale

February 18, 2015.
    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 February 3, 2015, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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 its fee schedule to 
establish fees for the BATS One Feed, amend fees for BZX Top and BZX 
Last Sale, add definitions for terms that apply to market data fees, 
and make certain technical, non-substantive changes.
    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 those 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 amend its fee schedule to establish fees 
for the BATS One Feed, amend fees for BZX Top and BZX Last Sale, add 
definitions for terms that apply to market data fees, and make certain 
technical, non-substantive changes.
Technical, Non-Substantive Changes
    The Exchange proposes the following technical, non-substantive 
amendments to its fee schedule regarding its existing market data fees. 
The Exchange proposes to rename the section entitled ``BZX Exchange 
PITCH Feed'' as the ``BZX Depth'', ``BZX Exchange Top Feed'' as ``BZX 
Top'', ``BZX Exchange Last Sale Feed'' as ``BZX Last Sale'', ``BZX 
Exchange Historical TOP'' as ``BZX Historical Top'', and ``Historical 
PITCH'' as ``Historical Depth.'' The Exchange does not propose to amend 
the content of these market data products; nor does the Exchange 
propose to amend the fees for these products, other than for BZX Top 
and BZX Last Sale as described below.
Definitions Applicable to Market Data Fees
    The Exchange proposes to include in its fee schedule the following 
defined terms that relate to the Exchange's market data fees. The 
proposed definitions are designed to provide greater transparency with 
regard to how the Exchange assesses fees for market data. The Exchange 
notes that none of the proposed definitions are designed to amend any 
fee, nor alter the manner in which it assesses fees.
    First, the Exchange proposes to define a ``Distributor'' as ``any 
entity that receives an Exchange Market Data product directly from the 
Exchange or indirectly through another entity and then distributes it 
internally or externally to a third party.'' \5\ In turn, an Internal 
Distributor and External Distributor will be separately defined. An 
Internal Distributor will be defined as a ``Distributor that receives 
the Exchange Market Data product and then distributes that data to one 
or more Users within the Distributor's own entity.'' \6\ An External 
Distributor will be defined as a ``Distributor that receives the 
Exchange Market Data product and then distributes that data to a third 
party or one or more Users outside the Distributor's own entity.'' \7\
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    \5\ The proposed definition of ``Distributor'' is similar to 
Nasdaq Rule 7047(d)(1).
    \6\ The proposed definition of ``Internal Distributor'' is 
similar to Nasdaq Rule 7047(d)(1)(A).
    \7\ The proposed definition of ``External Distributor'' is 
similar to Nasdaq Rule 7047(d)(1)(B).
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    Secondly, the Exchange proposes to add a definition of ``User'' to 
its fee schedule. A User will be defined as a ``natural person, a 
proprietorship, corporation, partnership, or entity, or device 
(computer or other automated service), that is entitled to receive 
Exchange data.'' For purposes of its market data fees, the Exchange 
will distinguish between ``Non-Professional Users'' and ``Professional 
Users.'' Specifically, a Non-Professional User will be defined as ``a 
natural person who is not: (i) Registered or qualified in any capacity 
with the Commission, the Commodity Futures Trading Commission, any 
state securities agency, any securities exchange or association; any 
commodities or futures contract market or association; (ii) engaged as 
an ``investment adviser'' as that term is defined in Section 201(11) of 
the Investment Advisers Act of 1940 (whether or not registered or 
qualified under that Act); or (iii) employed by a bank or other 
organization exempt from registration under federal or state securities 
laws to perform functions that will require registration or 
qualification if such functions were performed for an organization not 
so exempt.'' \8\ A Professional User will be defined as

[[Page 9829]]

``any User other than a Non-Professional User.'' \9\
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    \8\ The proposed definition of ``Professional User'' is similar 
to Nasdaq Rule 7047(d)(3)(A).
    \9\ The proposed definition of ``Non-Professional User'' is 
similar to Nasdaq Rule 7047(d)(3)(B).
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BZX Top and BZX Last Sale
    The cost of BZX Last Sale for an Internal Distributor is $500 per 
month. Likewise, the cost of BZX Top for an Internal Distributor is 
$500 per month. The Exchange does not charge per User fees for either 
BZX Last Sale or BZX Top. Therefore, the Exchange does not require an 
External Distributor of BZX Last Sale or BZX Top to count, classify 
(e.g., professional or non-professional) or report to the Exchange 
information regarding the customers to which they provide the data. 
Instead, the Exchange currently charges an External Distributor of BZX 
Last Sale a flat fee of $2,500 per month. The Exchange also currently 
separately charges an External Distributor of BZX Top a flat fee of 
$2,500 per month. End Users do not pay the Exchange for BZX Last Sale 
or BZX Top, nor are end Users required to enter into contracts with the 
Exchange.
    The Exchange proposes to now allow subscribers to either BZX Top or 
BZX Last Sale to also receive, upon request and at no additional cost, 
BZX Last Sale or BZX Top, as applicable. The Exchange also proposes to 
establish a New External Distributor Credit under which new External 
Distributors of BZX Top or BZX Last Sale will not be charged a 
Distributor Fee for their first three (3) months. The Exchange believes 
that the proposed pricing model is simple and easy for data recipients 
to comply with, and thus, will continue to result in a minimal 
additional administrative burden for data recipients who elect to 
receive both BZX Last Sale and BZX Top at no additional cost.
BATS One Feed
    The Commission recently approved a proposed rule change by the 
Exchange to establish a new market data product called the BATS One 
Feed.\10\ The BATS One Feed is a data feed that disseminates, on a 
real-time basis, the aggregate best bid and offer (``BBO'') of all 
displayed orders for securities traded on BZX and its affiliated 
exchanges \11\ and for which the BATS Exchanges report quotes under the 
Consolidated Tape Association (``CTA'') Plan or the Nasdaq/UTP 
Plan.\12\ The BATS One Feed also contains the individual last sale 
information for the BATS Exchanges (collectively with the aggregate 
BBO, the ``BATS One Summary Feed''). In addition, the BATS One Feed 
contains optional functionality which will enable recipients to elect 
to receive aggregated two-sided quotations from the BATS Exchanges for 
up to five (5) price levels for all securities that are traded on the 
BATS Exchanges in addition to the BATS One Summary Feed (``BATS One 
Premium Feed''). For each price level on one of the BATS Exchanges, the 
BATS One Premium Feed will include a two-sided quote and the number of 
shares available to buy and sell at that particular price level.
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    \10\ See Securities Exchange Act Release No. 73918 (December 23, 
2014), 79 FR 78920 (December 31, 2014) (File Nos. SR-EDGX-2014-25; 
SR-EDGA-2014-25; SR-BATS-2014-055; SR-BYX-2014-030) (Notice of 
Amendments No. 2 and Order Granting Accelerated Approval to Proposed 
Rule Changes, as Modified by Amendments Nos. 1 and 2, to Establish a 
New Market Data Product called the BATS One Feed) (``BATS One 
Approval Order'').
    \11\ The Exchange's affiliated exchanges are EDGA Exchange, Inc. 
(``EDGA''), EDGX Exchange, Inc. (``EDGX''), and BATS Y-Exchange, 
Inc. (``BYX'', together with EDGX, BZX, and BYX, the ``BATS 
Exchanges''). On January 23, 2014, BATS Global Markets, Inc. 
(``BGMI''), the former parent company of the Exchange and BYX, 
completed its business combination with Direct Edge Holdings LLC, 
the parent company of EDGA and EDGX. See Securities Exchange Act 
Release No. 71375 (January 23, 2014), 79 FR 4771 (January 29, 2014) 
(SR-BATS-2013-059; SR-BYX-2013-039). Upon completion of the business 
combination, DE Holdings and BGMI each became intermediate holding 
companies, held under a single new holding company. The new holding 
company, formerly named ``BATS Global Markets Holdings, Inc.,'' 
changed its name to ``BATS Global Markets, Inc.'' and BGMI changed 
its name to ``BATS Global Markets Holdings, Inc.''
    \12\ The Exchange understands that each of the BATS Exchanges 
will separately file substantially similar proposed rule changes 
with the Commission to implement fees for the BATS One Feed.
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    The Exchange uses the following data feeds to create the BATS One 
Summary Feed and the BATS One Premium Feed, each of which is available 
to other vendors: EDGX Depth, EDGA Depth, BYX Depth, and BZX Depth, and 
each of which have been previously published by the Commission.\13\ A 
vendor that wishes to create a product like the BATS One Summary Feed 
could instead subscribe to EDGX Top, EDGX Last Sale, EDGA Top, EDGA 
Last Sale, BZX Top, BZX Last Sale, BYX Top, and BYX Last Sale.\14\ The 
BATS Exchanges are the exclusive distributors of these individual data 
feeds from which certain data elements are taken to create the BATS One 
Feed as well as the feeds that a vendor may use to create a product 
like the BATS One Summary Feed. By contrast, the Exchange would not be 
the exclusive distributor of the aggregated and consolidated 
information that comprises the BATS One Feed. Any entity that receives, 
or elects to received [sic], the individual data feeds or the feeds 
that may be used to create a product like the BATS One Feed would be 
able to, if it so chooses, to create a data feed with the same 
information included in the BATS One Feed and sell and distribute it to 
its clients so that it could be received by those clients as quickly as 
the BATS One Feed would be received by those same clients.\15\
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    \13\ See Securities Exchange Act Release Nos. 66864 (April 26, 
2012), 77 FR 26064 (May 2, 2012) (SR-EDGX-2012-14); 66863 (April 26, 
2012), 77 FR 26059 (May 2, 2012) (SR-EDGA-2012-15); 69936 (July 3, 
2013), 78 FR 41483 (July 10, 2013) (SR-BATS-2013-39); 69935 (July 3, 
2013), 78 FR 47447 (July 10, 2013) (SR-BYX-2013-023). See EDGA Rule 
13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and (c), and BYX Rule 
11.22(a) and (c) for a description of the depth of book feeds 
offered by each of the BATS Exchanges.
    \14\ See Securities Exchange Act Release Nos. 73990 (January 5, 
2015) (SR-EDGA-2014-35) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Adopt Top and Last Sale 
Data Feeds); 73989 (January 5, 2015) (SR-EDGX-2014-36) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Adopt 
Top and Last Sale Data Feeds). See also BZX and BYX Rules 11.22(d) 
and (g).
    \15\ See BATS One Approval Order, supra note 10. The Exchange 
notes that a vendor can obtain the underlying depth-of-book feeds as 
well as EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX Top, 
BZX Last Sale, BYX Top and BYX Last Sale on the same latency basis 
as the Exchange would receive the underlying depth-of-book feeds 
necessary to create the BATS One Feed, including the BATS One 
Summary Feed. Id.
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    The Exchange proposes to amend its fee schedule to incorporate fees 
related to the BATS One Feed. The Exchange proposes to charge different 
fees to vendors depending on whether the vendor elects to receive: (i) 
The BATS One Summary Feed; or (ii) the optional BATS One Premium Feed. 
These fees include the following, each of which are described in detail 
below: (i) Distributor Fees; \16\ (ii) Usage Fees for both Professional 
and Non-Professional Users; \17\ (iii) Enterprise Fees; \18\ and (iv)

[[Page 9830]]

a Data Consolidation Fee. The amount of each fee may differ depending 
on whether they use the BATS One Feed data for internal or external 
distribution. Vendors that distribute the BATS One Feed data both 
internally and externally will be subject to the higher of the two 
Distributor Fees.
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    \16\ The Exchange notes that Distributor Fees as well as the 
distinctions based on external versus internal distribution have 
been previously filed with the Commission by Nasdaq, Nasdaq OMX BX, 
and Nasdaq OMX PSX. See Nasdaq Rule 7019(b); see also Securities 
Exchange Act Release No. 62876 (September 9, 2010), 75 FR 56624 
(September 16, 2010) (SR-PHLX-2010-120); Securities Exchange Act 
Release Nos. 62907 (September 14, 2010), 75 FR 57314 (September 20, 
2010) (SR-NASDAQ-2010-110); 59582 (March 16, 2009), 74 FR 12423 
(March 24, 2009) (Order approving SR-NASDAQ-2008-102); Securities 
Exchange Act Release No. 63442 (December 6, 2010), 75 FR 77029 
(December 10, 2010) (SR-BX-2010-081).
    \17\ The Exchange notes that User fees as well as the 
distinctions based on professional and non-professional users have 
been previously filed with or approved by the Commission by Nasdaq 
and the New York Stock Exchange, Inc. (``NYSE''). See Securities 
Exchange Act Release Nos. 59582 (March 16, 2009), 74 FR 12423 (March 
24, 2009) (Order approving SR-NASDAQ-2008-102).
    \18\ The Exchange notes that Enterprise fees have been 
previously filed with or approved by the Commission by Nasdaq, NYSE 
and the CTA/CQ Plans. See Nasdaq Rule 7047. Securities Exchange Act 
Release Nos. 71507 (February 7, 2014), 79 FR 8763 (February 13, 
2014) (SR-NASDAQ-20140011); 70211 (August 15, 2013), 78 FR 51781 
(August 21, 2013) (SR-NYSE-2013-58); 70010 (July 19, 2013) (File No. 
SR-CTA/CQ-2013-04).
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    Internal Distributor Fees. As proposed, each Internal Distributor 
that receives only the BATS One Summary Feed shall pay a fee of $10,000 
per month. The Exchange also proposes that each Internal Distributor 
shall pay a fee of $15,000 per month where they elect to receive the 
BATS One Premium Feed. The Exchange does not propose to charge any User 
fees for the BATS One Feed where the data is received and subsequently 
internally distributed to Professional or Non-Professional Users.
    External Distributor Fees. The Exchange proposes to charge those 
firms that distribute the BATS One Feed externally a fee of $5,000 per 
month for the BATS One Summary Feed. As proposed, each External 
Distributor shall pay a fee of $12,500 per month where they elect to 
receive the BATS One Premium Feed.
    The BATS One Feed is comprised of data included in EDGX Depth, EDGA 
Depth, BYX Depth, and BZX Depth.\19\ Currently, an External Distributor 
could create a competing product to the BATS One Premium Feed \20\ by 
purchasing the [sic] each of these depth of book products from the 
individual BATS Exchanges and then performing its own aggregation and 
consolidation functions. The combined External Distributor fees for 
these individual data feeds of the BATS Exchanges is $12,500 per 
month,\21\ equal to the $12,500 per month External Distributor Fee 
proposed for the BATS One Premium Feed. An External Distributor that 
seeks to create a competing product to the BATS One Summary Feed could 
instead subscribe to the following data feeds: EDGX Top, EDGX Last 
Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top, and 
BYX Last Sale,\22\ and then perform their own aggregation and 
consolidation function. The combined External Distributor fees for 
these individual data feeds of the BATS Exchanges is $5,000 per 
month,\23\ equal to the $5,000 per month External Distributor Fee 
proposed for the BATS One Summary Feed. To ensure that vendors could 
compete with the Exchange by creating the same product as the BATS One 
Feed and selling it to their clients, the Exchange proposes to charge 
External Distributors an External Distributor fee that equals the 
combined External Distributor fees for each of the individual feeds 
listed above.
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    \19\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and 
(c), and BYX Rule 11.22(a) and (c) for a description of the depth of 
book feeds offered by each of the BATS Exchanges.
    \20\ Like the Exchange, an External Distributor would also be 
able to create a competing product to the BATS One Summary Feed from 
the data received via EDGX Depth, EDGA Depth, BYX Depth, and BZX 
Depth, without having to separately purchase the top and last sale 
feeds from each of the BATS Exchanges.
    \21\ The monthly External Distributor fee is $2,500 per month 
for EDGX Depth, $2,500 per month for EDGA Depth, $2,500 for BYX 
Depth, and $5,000 for BZX Depth.
    \22\ See supra note 14. See also BATS Rule 11.22(d) and (g).
    \23\ The monthly External Distributor fee is $1,250 per month 
for EDGX Top and EDGX Last Sale, free for EDGA Top and EDGA Last 
Sale, $1,250 for BYX Top and BYX Last Sale, and $2,500 for BZX Top 
and BZX Last Sale. See SR-EDGA-2015-01, SR-EDGX-2015-09, and SR-BYX-
2015-09. See also the BZX Fee Schedule available at http://www.batstrading.com/support/fee_schedule/bzx/.
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    The Exchange also proposes to establish a New External Distributor 
Credit under which new External Distributors of the BATS One Summary 
Feed will not be charged a Distributor Fee for their first three (3) 
months in order to allow them to enlist new Users to receive the BATS 
One Feed.\24\ The New External Distributor Fee Credit will not be 
available to External Distributors of the BATS One Premium Feed. The 
Exchange does not believe the New External Distributor Credit would 
inhibit a vendor from creating a competing product and offer a similar 
free period as the Exchange. Specifically, a vendor seeking to create 
the BATS One Summary Feed could do so by subscribing to EDGX Top, EDGX 
Last Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX Last Sale, BYX Top 
and BYX Last Sale, all of which are either free or also include a New 
External Distributor Credit identical to that proposed for the BATS One 
Summary Feed. As a result, a competing vendor would incur similar costs 
as the Exchange in offering such free period for a competing product 
and may do so on the same terms as the Exchange.
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    \24\ The Exchange notes that just as a third party vendor could 
choose to offer special pricing in order to incentivize data 
recipients to perform necessary development and other work in order 
to receive and distribute a new data product, the Exchange has 
proposed pricing to incentivize data recipients to take and 
distribute the BATS One Feed.
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User Fees
    In addition to Internal and External Distributor Fees, the Exchange 
proposes to charge those who receive the BATS One Feed from External 
Distributors different fees for both their Professional Users and Non-
Professional Users. The Exchange will assess a monthly fee for 
Professional Users of $10.00 per User for receipt of the BATS One 
Summary Feed or $15.00 per User who elects to also receive the BATS One 
Premium Feed. Non-Professional Users will be assessed a monthly fee of 
$0.25 per user for the BATS One Summary Feed or $0.50 per user where 
they elects to receive the BATS One Premium Feed.
    External Distributors must count every Professional User and Non-
Professional User to which they provide BATS One Feed data. Thus, the 
Distributor's count will include every person and device that accesses 
the data regardless of the purpose for which the individual or device 
uses the data.\25\ Distributors must report all Professional and Non-
Professional Users in accordance with the following:
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    \25\ Requiring that every person or device to which they provide 
the data is counted by the Distributor receiving the BATS One Feed 
is similar to the NYSE Unit-of-Count Policy. The only difference is 
that the NYSE Unit-of-Count Policy requires the counting of users 
receiving a market data product through both internal and external 
distribution. Because the Exchange proposes to charge Usage Fees 
solely to recipient firms who's Users receive data from an external 
distributor and not through internal distribution, it only requires 
the counting of Users by Distributors that disseminate the BATS One 
Feed externally.
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     In connection with an External Distributor's distribution 
of the BATS One Feed, the Distributor should count as one User each 
unique User that the Distributor has entitled to have access to the 
BATS One Feed. However, where a device is dedicated specifically to a 
single individual, the Distributor should count only the individual and 
need not count the device.
     The External Distributor should identify and report each 
unique User. If a User uses the same unique method to gain access to 
the BATS One Feed, the Distributor should count that as one User. 
However, if a unique User uses multiple methods to gain access to the 
BATS One Feed (e.g., a single User has multiple passwords and user 
identifications), the External Distributor should report all of those 
methods as an individual User.
     External Distributors should report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
     If an External Distributor entitles one or more 
individuals to use the same device, the External Distributor should 
include only the individuals, and not the device, in the count.

[[Page 9831]]

    Each External Distributor will receive a credit against its monthly 
Distributor Fee for the BATS One Feed equal to the amount of its 
monthly Usage Fees up to a maximum of the Distributor Fee for the BATS 
One Feed. For example, an External Distributor will be subject to a 
$12,500 monthly Distributor Fee where they elect to receive the BATS 
One Premium Feed. If that External Distributor reports User quantities 
totaling $12,500 or more of monthly usage of the BATS One Premium Feed, 
it will pay no net Distributor Fee, whereas if that same External 
Distributor were to report User quantities totaling $11,500 of monthly 
usage, it will pay a net of $1,000 for the Distributor Fee. External 
Distributors will remain subject to the per User fees discussed above. 
In every case the Exchange will receive at least $12,500 in connection 
with the distribution of the BATS One Feed (through a combination of 
the External Distribution Fee and per User Fees).
    Enterprise Fee. The Exchange also proposes to establish a $50,000 
per month Enterprise Fee that will permit a recipient firm who receives 
the BATS Summary Feed portion of the BATS One Feed from an External 
Distributor to receive the data for an unlimited number of Professional 
and Non-Professional Users and $100,000 per month for recipient firms 
who elect to receive the BATS One Premium Feed. For example, if a 
recipient firm had 15,000 Professional Users who each receive the BATS 
One Summary Feed portion of the BATS One Feed at $10.00 per month, then 
that recipient firm will pay $150,000 per month in Professional Users 
fees. Under the proposed Enterprise Fee, the recipient firm will pay a 
flat fee of $50,000 for an unlimited number of Professional and Non-
Professional Users for the BATS Summary Feed portion of the BATS One 
Feed. A recipient firm must pay a separate Enterprise Fee for each 
External Distributor that controls display of the BATS One Feed if it 
wishes such User to be covered by an Enterprise Fee rather than by per-
User fees. A recipient firms that pays the Enterprise Fee will not have 
to report its number of such Users on a monthly basis. However, every 
six months, a recipient firm must provide the Exchange with a count of 
the total number of natural person users of each product, including 
both Professional and Non-Professional Users. The Enterprise Fee would 
be in addition to the applicable Distributor Fee.
Data Consolidation Fee
    The Exchange also proposes to charge External Distributors of the 
BATS One Feed a separate Data Consolidation Fee, which reflects the 
value of the aggregation and consolidation function the Exchange 
performs in creating the BATS One Feed. As stated above, the Exchange 
creates the BATS One Feed from data derived from the EDGX Depth, EDGA 
Depth, BYX Depth, and BZX Depth.\26\ The Exchange notes that an 
External Distributor could create a competing product to the BATS One 
Feed based on these individual data feeds, or, alternatively, the 
applicable Top and Last Sale products offered by the Exchanges, and 
could charge its clients a fee that it believes reflects the value of 
the aggregation and consolidation function. The Exchanges [sic] 
believes that the incremental cost to a particular vendor for 
aggregation can be supported by the vendor's revenue opportunity and 
may be inconsequential if such vendor already has systems in place to 
perform these functions as part of creating its proprietary market data 
products and is able to allocate these costs over numerous products and 
customer relationships. For these reasons, the Exchange believes that 
vendors could readily offer a product similar to the BATS One Feed on a 
competitive basis at a similar cost.
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    \26\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and 
(c), and BYX Rule 11.22(a) and (c) for a description of the depth of 
book feeds offered by each of the BATS Exchanges.
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    The Exchange does not propose to charge Internal Distributors the 
separate Data Consolidation Fee as the proposed Internal Distributor 
Fees are greater than the cost of subscribing to each of the underlying 
individual feed. As discussed above, each Internal Distributor that 
receives only the BATS One Summary Feed shall pay a fee of $10,000 per 
month, as compared to $5,000, which is the total of the underlying 
feeds.\27\ Each Internal Distributor shall pay a fee of $15,000 per 
month where they elect to receive the BATS One Premium Feed, as 
compared to $12,500, which is the total cost of the underlying depth 
feeds.\28\ The increased cost of the BATS One Feed is designed to 
include the value of the aggregation and consolidation function the 
Exchange performs in creating the BATS One Feed. Therefore, the 
Exchange does not propose to charge Internal Distributors a separate 
Data Consolidation Fee.
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    \27\ See supra note 23.
    \28\ See supra note 21.
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 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\29\ in general, and 
furthers the objectives of Section 6(b)(4),\30\ 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 believes that the proposed rates are equitable 
and non-discriminatory in that they apply uniformly to all Members. The 
Exchange believes the proposed fees are competitive with those charged 
by other venues and, therefore, reasonable and equitably allocated to 
Members.
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    \29\ 15 U.S.C. 78f.
    \30\ 15 U.S.C. 78f(b)(4).
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Technical, Non-Substantive Changes
    The Exchange believes that the non-substantive changes to its fee 
schedule are reasonable because they are non-substantive changes that 
are designed to amend any fee, nor alter the manner in which it 
assesses fees. These non-substantive, technical changes to the fee 
schedule are intended to streamline the naming convention of the 
Exchange's market data products, making the fee schedule clearer and 
less confusing for investors, thereby removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest.
Definitions Applicable to Market Data Fees
    The Exchange believes that the proposed definitions are reasonable 
because they are designed to provide greater transparency to Members 
with regard to how the Exchange assesses fees for market data. The 
Exchange notes that none of the proposed definitions are designed to 
amend any fee, nor alter the manner in which it assesses fees. The 
Exchange believes that Members would benefit from clear guidance in its 
fee schedule that describes the manner in which the Exchange would 
assess fees. These definitions are intended to make the fee schedule 
clearer and less confusing for investors and eliminate potential 
investor confusion, thereby removing impediments to and perfecting the 
mechanism of a free and open market and a national market system, and, 
in general, protecting investors and the public interest. Lastly, the 
proposed definitions are based on existing rules of

[[Page 9832]]

the Nasdaq Stock Market LLC (``Nasdaq'').\31\
---------------------------------------------------------------------------

    \31\ The proposed definition of ``Distributor'' is similar to 
Nasdaq Rule 7047(d)(1). The proposed definition of ``Internal 
Distributor'' is similar to Nasdaq Rule 7047(d)(1)(A). The proposed 
definition of ``External Distributor'' is similar to Nasdaq Rule 
7047(d)(1)(B). The proposed definition of ``Professional User'' is 
similar to Nasdaq Rule 7047(d)(3)(A). The proposed definition of 
``Non-Professional User'' is similar to Nasdaq Rule 7047(d)(3)(B).
---------------------------------------------------------------------------

BZX Top and BZX Last Sale
    The Exchange believes that its amended fees for BZX Last Sale and 
BZX Top are consistent with Section 6(b)(4) of the Act \32\ because 
they provide for an equitable allocation of reasonable dues, fees, and 
other charges among its members and other recipients of Exchange data. 
The Exchange also believes the proposed fees for BZX Last Sale and BZX 
Top are reasonable and equitable in light of the benefits to data 
recipients. The Exchange believes the proposed fee change is equitable 
and reasonable in that subscribers to either BZX Top or BZX Last Sale 
would be able to also receive, upon request and at no additional cost, 
BZX Last Sale or BZX Top, as applicable, resulting in a fee reduction. 
The Exchange believes that the proposed pricing is simple and easy for 
data recipients to comply with, and thus, will result in a minimal 
additional administrative burden for data recipients who elect to 
receive both BZX Last Sale and BZX Top at no additional cost. BZX Last 
Sale and BZX Top are distributed and purchased on a voluntary basis, in 
that neither the Exchanges nor market data distributors are required by 
any rule or regulation to make this data available. Accordingly, 
Distributors and Users can discontinue use at any time and for any 
reason, including due to an assessment of the reasonableness of fees 
charged. Lastly, the Exchange also believes that the proposed 
amendments to its fee schedule are reasonable and non-discriminatory 
because it [sic] will apply uniformly to all Members.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

BATS One Feed
    The Exchange also believes that the proposed fees for the BATS One 
Feed are consistent with Section 6(b) of the Act,\33\ in general, and 
Section 6(b)(4) of the Act,\34\ in particular, in that it [sic] they 
provide for an equitable allocation of reasonable fees among Users and 
recipients of the data and are not designed to permit unfair 
discrimination among customers, brokers, or dealers. The Exchange also 
believes that the proposed rule change is consistent with Section 11(A) 
of the Act \35\ in that it supports (i) fair competition among brokers 
and dealers, among exchange markets, and between exchange markets and 
markets other than exchange markets and (ii) the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities. Furthermore, the 
proposed rule change is consistent with Rule 603 of Regulation NMS,\36\ 
which provides that any national securities exchange that distributes 
information with respect to quotations for or transactions in an NMS 
stock do so on terms that are not unreasonably discriminatory. In 
adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(4).
    \35\ 15 U.S.C. 78k-1.
    \36\ See 17 CFR 242.603.
---------------------------------------------------------------------------

    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors will be subject to the proposed fee structure on an equivalent 
basis. The BATS One Feed would be distributed and purchased on a 
voluntary basis, in that neither the BATS Exchanges nor market data 
distributors are required by any rule or regulation to make this data 
available. Accordingly, Distributors and Users can discontinue use at 
any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. In addition, any customer that wishes 
to purchase one or more of the individual data feeds offered by the 
BATS Exchanges would be able to do so.
    The Exchange has taken into consideration its affiliated 
relationship with EDGA, BYX, and EDGX in its design of the BATS One 
Feed to assure that vendors would be able to offer a similar product on 
the same terms as the Exchange from a cost perspective. While the BATS 
Exchanges are the exclusive distributors of the individual data feeds 
from which certain data elements may be taken to create the BATS One 
Feed, they are not the exclusive distributors of the aggregated and 
consolidated information that comprises the BATS One Feed. Any entity 
that receives, or elects to receive, the individual data feeds would be 
able to, if it so chooses, to create a data feed with the same 
information included in the BATS One Feed and sell and distribute it to 
its clients so that it could be received by those clients as quickly as 
the BATS One Feed would be received by those same clients with no 
greater cost than the Exchange.\37\
---------------------------------------------------------------------------

    \37\ See BATS One Approval Order, supra note 10. The Exchange 
notes that a vendor can obtain the underlying depth-of-book feeds as 
well as EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX Top, 
BZX Last Sale, BYX Top and BYX Last Sale on the same latency basis 
as the Exchange would receive the underlying depth-of-book feeds 
necessary to create the BATS One Feed, including the BATS One 
Summary Feed. Id.
---------------------------------------------------------------------------

    In addition, vendors and subscribers that do not wish to purchase 
the BATS One Feed may separately purchase the individual underlying 
products, and if they so choose, perform a similar aggregation and 
consolidation function that the Exchange performs in creating the BATS 
One Feed. To enable such competition, the Exchange is offering the BATS 
One Feed on terms that a subscriber of those underlying feeds could 
offer a competing product if it so chooses.
    The Exchange notes that the use of the BATS One Feed is entirely 
optional. Firms have a wide variety of alternative market data products 
from which to choose, including the Exchanges' own underlying data 
products, the Nasdaq and the NYSE proprietary data products described 
in this filing,\38\ and consolidated data. Moreover, the Exchange is 
not required to make any proprietary data products available or to 
offer any specific pricing alternatives to any customers.
---------------------------------------------------------------------------

    \38\ See infra note 52.
---------------------------------------------------------------------------

    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
the BATS One Feed further ensures that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar market data products. If another exchange (or its 
affiliate) were to charge less to consolidate and distribute its 
similar product than the Exchange charges to consolidate and distribute 
the BATS One Feed, prospective Users likely would not subscribe to, or 
would cease subscribing to, the BATS One Feed. In addition, the 
Exchange would compete with unaffiliated market data vendors who would 
be in a position to consolidate and distribute the same data that 
comprises the BATS One Feed into the vendor's own comparable market

[[Page 9833]]

data product. If the third-party vendor is able to provide the exact 
same data for a lower cost, prospective Users would avail themselves of 
that lower cost and elect not to take the BATS One Feed.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or ratemaking approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would be so complicated that it could 
not be done practically.\39\
---------------------------------------------------------------------------

    \39\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities 
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Establish an 
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative 
December 1, 2014).
---------------------------------------------------------------------------

    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.
    User Fees. The Exchange believes that implementing the Professional 
and Non-Professional User fees for the BATS One Feed is reasonable 
because it will make the product more affordable and result in greater 
availability to Professional and Non-Professional Users. Moreover, 
introducing a modest Non-Professional User fee for the BATS One Feed is 
reasonable because it provides an additional method for retail 
investors to access the BATS One Feed data by providing the same data 
that is available to Professional Users. The Exchange believes that the 
proposed fees are equitable and not unfairly discriminatory because 
they will be charged uniformly to recipient firms and Users. The fee 
structure of differentiated Professional and Non-Professional fees has 
long been used by other exchanges for their proprietary data products, 
and by the Nasdaq UTP and the CTA and CQ Plans in order to reduce the 
price of data to retail investors and make it more broadly 
available.\40\ Offering the BATS One Feed to Non-Professional Users 
with the same data available to Professional Users results in greater 
equity among data recipients.
---------------------------------------------------------------------------

    \40\ See, e.g., Securities Exchange Act Release No. 20002, File 
No. S7-433 (July 22, 1983) (establishing nonprofessional fees for 
CTA data); Nasdaq Rules 7023(b), 7047.
---------------------------------------------------------------------------

    In addition, the proposed fees are reasonable when compared to fees 
for comparable products offered by the NYSE, Nasdaq, and under the CTA 
and CQ Plans. Specifically, Nasdaq offers Nasdaq Basic, which includes 
best bid and offer and last sale data for Nasdaq and the FINRA/Nasdaq 
TRF, for a monthly fee of $26 per professional subscriber and $1 per 
non-professional subscriber; alternatively, a broker-dealer may 
purchase an enterprise license at a rate of $350,000 per month for 
internal distribution to an unlimited number of professional users or 
$365,000 per month for external distribution for up to 16,000 
professional users, plus $2 for each additional professional user over 
16,000.\41\ The NYSE offers BQT, which provides BBO and last sale 
information for the NYSE, NYSE Arca, and NYSE MKT. To obtain BQT, 
subscribers must purchase the [sic] each underlying data feed for a 
monthly fee of $18 per professional subscriber and $1 per non-
professional subscriber; alternatively, a broker-dealer may purchase an 
enterprise license at a rate of $365,000 per month for an unlimited 
number of professional users. The NYSE does not offer an enterprise 
license for non-professional users. The Exchange's proposed per-User 
Fees are lower than the NYSE's and Nasdaq's fees. In addition, the 
Exchange is proposing Professional and Non-Professional User fees and 
Enterprise Fees that are less than the fees currently charged by the 
CTA and CQ Plans. Under the CTA and CQ Plans, Tape A consolidated last 
sale and bid-ask data are offered together for a monthly fee of $20-$50 
per device, depending on the number of professional subscribers, and 
$1.00 per non-professional subscriber, depending on the number of non-
professional subscribers.\42\ A monthly enterprise fee of $686,400 is 
available under which a U.S. registered broker-dealer may distribute 
data to an unlimited number of its own employees and its non-
professional subscriber brokerage account customers. Finally, in 
contrast to Nasdaq UTP and the CTA and CQ Plans, the Exchange also will 
permit enterprise distribution by a non-broker-dealer.
---------------------------------------------------------------------------

    \41\ See Nasdaq Rule 7047.
    \42\ See CTA Plan dated September 9, 2013 and CQ Plan dated 
September 9, 2013, available at  https://cta.nyxdata.com/CTA.
---------------------------------------------------------------------------

    Enterprise Fee. The proposed Enterprise Fee for the BATS One Feed 
is reasonable as the fee proposed is less than the enterprise fees 
currently charged for underlying data feeds for NYSE BQT, Nasdaq Basic, 
and consolidated data distributed under the Nasdaq UTP and the CTA and 
CQ Plans. In addition, the Enterprise Fee could result in a fee 
reduction for recipient firms with a large number of Professional and 
Non-Professional Users. If a recipient firm has a smaller number of 
Professional Users of the BATS One Feed, then it may continue using the 
per User structure and benefit from the per User Fee reductions. By 
reducing prices for recipient firms with a large number of Professional 
and Non-Professional Users, the Exchange believes that more firms may 
choose to receive and to distribute the BATS One Feed, thereby 
expanding the distribution of this market data for the benefit of 
investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count natural person users every six months, which is 
a significant reduction in administrative burden. Finally, the Exchange 
believes that it is equitable and not unfairly discriminatory to 
establish an Enterprise Fee because it reduces the Exchange's costs and 
the Distributor's administrative burdens in tracking and auditing large 
numbers of users.
    Distributor Fee. The Exchange believes that the proposed 
Distributor Fees are also reasonable, equitably allocated, and not 
unreasonably discriminatory. The fees for Members and non-Members are 
uniform except with respect to reasonable distinctions with respect to 
internal and external distribution.\43\ The Exchange believes

[[Page 9834]]

that the Distributor Fees for the BATS One Feed are reasonable and fair 
in light of alternatives offered by other market centers. First, 
although the Internal Distributor fee is higher than those of 
competitor products, there are no User fees assessed for Users that 
receive the BATS One Feed data through an Internal Distributor, which 
results in a net cost that is lower than competitor products for many 
data recipients and will be easier to administer.
---------------------------------------------------------------------------

    \43\ The Exchange notes that distinctions based on external 
versus internal distribution have been previously filed with the 
Commission by Nasdaq, Nasdaq OMX BX, and Nasdaq OMX PSX. See Nasdaq 
Rule 019(b); see also Securities Exchange Act Release No. 62876 
(September 9, 2010), 75 FR 56624 (September 16, 2010) (SR-PHLX-2010-
120); Securities Exchange Act Release No. 62907 (September 14, 
2010), 75 FR 57314 (September 20, 2010) (SR-NASDAQ-2010-110); 
Securities Exchange Act Release No. 63442 (December 6, 2010), 75 FR 
77029 (December 10, 2010) (SR-BX-2010-081).
---------------------------------------------------------------------------

    The proposed Distributor Fees for the BATS One Feed are also 
designed to ensure that vendors could compete with the Exchange by 
creating a similar product as the BATS One Feed. The Exchange believes 
that the proposed Distributor Fees are equitable and reasonable as it 
[sic] equals the combined fee of subscribing to each individual data 
feed of the BATS Exchanges, which have been previously published by the 
Commission.\44\ Currently, an External Distributor that seeks to create 
a competing product to the BATS One Premium Feed \45\ would need to 
purchase each of the depth of book products from the individual BATS 
Exchanges and then perform its own aggregation and consolidation 
functions.\46\ The combined external distributor fees for these 
individual depth of book feeds of the BATS Exchanges is $12,500 per 
month,\47\ equal to the $12,500 per month External Distributor Fee 
proposed for the BATS One Premium Feed. An External Distributor that 
seeks to create a competing product to the BATS One Summary Feed could 
alternatively subscribe to EDGX Top, EDGX Last Sale, EDGA Top, EDGA 
Last Sale, BZX Top, BZX Last Sale, BYX Top, and BYX Last Sale, and then 
perform their own aggregation and consolidation function. The combined 
external distributor fees for these individual data feeds of the BATS 
Exchanges is $5,000 per month,\48\ equal to the $5,000 per month 
External Distributor Fee proposed for the BATS One Summary Feed. In 
addition, the Exchange believes it is reasonable to not charge External 
Distributors a Distribution Fee during their first three (3) months and 
does not believe this would inhibit a vendor from creating a competing 
product and offer a similar free period as the Exchange. Specifically, 
a vendor seeking to create the BATS One Summary Feed could do so by 
subscribing to EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX 
Top, BZX Last Sale, BYX Top and BYX Last Sale, all of which are either 
free or also include a New External Distributor Credit identical to 
that proposed for the BATS One Summary Feed. As a result, a competing 
vendor would incur similar costs as the Exchange in offering such free 
period for a competing product and may do so on the same terms as the 
Exchange.
---------------------------------------------------------------------------

    \44\ See supra notes 13 and 14.
    \45\ Like the Exchange, an External Distributor would also be 
able to create a competing product to the BATS One Summary Feed from 
the data received via EDGX Depth, EDGA Depth, BYX Depth, and BZX 
Depth, without having to separately purchase the top and last sale 
feeds from each of the BATS Exchanges.
    \46\ As discussed, the Exchange proposes to charge External 
Distributors a separate Data Consolidation Fee to reflect the value 
of the consolidation function performed by the Exchange.
    \47\ See supra note 23.
    \48\ See supra note 21.
---------------------------------------------------------------------------

Data Consolidation Fee
    The Exchange believes that the proposed $1,000 per month Data 
Consolidation Fee charged to External Distributors who receive the BATS 
One Feed is reasonable because it represents the value of the data 
aggregation and consolidation function that the Exchange performs. The 
Exchange also notes that its proposed $1,000 per month Data 
Consolidation Fee is identical to an access fee charged by the NYSE for 
BQT, which is also designed to represent the value of the data 
aggregation function provided by the NYSE in constructing it BQT 
feed.\49\
---------------------------------------------------------------------------

    \49\ See Securities Exchange Act Release No. 73816 (December 11, 
2014), 79 FR 75200 (December 17, 2014) (SR-NYSE-2014-64) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to 
Establish an Access Fee for the NYSE Best Quote and Trades Data 
Feed, Operative December 1, 2014).
---------------------------------------------------------------------------

    The Exchange further believes the proposed Data Consolidation Fee 
is not designed to permit unfair discrimination because all External 
Distributor who subscribe to the BATS One Feed will be charged the same 
fee. The Exchange believes it is reasonable and not unfairly 
discriminatory to not charge Internal Distributor a separate Data 
Consolidation Fee as the proposed Internal Distributor Fees are greater 
than the cost of subscribing to each of the underlying individual feed. 
As discussed above, each Internal Distributor that receives only the 
BATS One Summary Feed shall pay a fee of $10,000 per month as compared 
to $5,000, which is the total of the underlying feeds.\50\ Each 
Internal Distributor shall pay a fee of $15,000 per month where they 
elect to receive the BATS One Premium Feed as compared to $12,500, 
which is the total cost of the underlying depth feeds.\51\ The 
increased cost of the BATS One Feed is designed to include the value of 
the aggregation and consolidation function the Exchange performs in 
creating the BATS One Feed. Therefore, the Exchange believes the 
proposed application of the Data Consolidation Fee is reasonable would 
not permit unfair discrimination.
---------------------------------------------------------------------------

    \50\ See supra note 23.
    \51\ See supra note 21.
---------------------------------------------------------------------------

    In addition, a vendor could create a competing product based on the 
individual data feeds and charge its clients a fee that it believes 
reflects the value of the aggregation and consolidation function that 
is competitive with the BATS One Feed pricing. The Exchanges believes 
that the incremental cost to a particular vendor for aggregation can be 
supported by the vendor's revenue opportunity and may be 
inconsequential if such vendor already has systems in place to perform 
these functions as part of creating its proprietary market data 
products and is able to allocate these costs over numerous products and 
customer relationships. Therefore, the Exchange believes the proposed 
pricing would enable a vendor to create a competing product based on 
the individual data feeds and charge its clients a fee that it believes 
reflects the value of the aggregation and consolidation function that 
is competitive with BATS One Feed pricing as discussed further below.

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.
Technical, Non-Substantive Changes
    The proposed name changes to the Exchange's market data products 
will not result in any burden on competition. The proposed amendments 
are not designed to address and competitive issues, but rather provide 
consistency amongst the naming conventions used for the Exchange market 
data products, resulting in additional clarity and transparency to 
Members, Users, and the investing public regarding the Exchange's 
market data products. The Exchange notes that none of the proposed non-
substantive changes are designed to amend any fee, nor alter the manner 
in which it assesses fees. These non-substantive, technical changes to 
the fee schedule are intended to make the fee schedule clearer and less 
confusing for investors and eliminate potential investor confusion.

[[Page 9835]]

Definitions Applicable to Market Data Fees
    The proposed definitions applicable to market data fees will not 
result in any burden on competition. The proposed definitions are not 
designed to amend any fee, nor alter the manner in which it assesses 
fees. The Exchange believes that Members would benefit from clear 
guidance in its fee schedule that describes the manner in which the 
Exchange would assess fees for market data. These definitions are 
intended to make the Fee Schedule clearer and less confusing for 
investors and are not designed to have a competitive impact.
BZX Top and BZX Last Sale
    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. The 
Exchange's ability to price BZX Last Sale and BZX Top are constrained 
by: (i) Competition among exchanges, other trading platforms, and Trade 
Reporting Facilities (``TRF'') that compete with each other in a 
variety of dimensions; (ii) the existence of inexpensive real-time 
consolidated data and market-specific data and free delayed data; and 
(iii) the inherent contestability of the market for proprietary data.
    The Exchange and its market data products are subject to 
significant competitive forces and the proposed fees represent 
responses to that competition. To start, the Exchange competes 
intensely for order flow. It competes with the other national 
securities exchanges that currently trade equities, with electronic 
communication networks, with quotes posted in FINRA's Alternative 
Display Facility, with alternative trading systems, and with securities 
firms that primarily trade as principal with their customer order flow.
    In addition, BZX Last Sale and BZX Top compete with a number of 
alternative products. For instance, BZX Last Sale and BZX Top do not 
provide a complete picture of all trading activity in a security. 
Rather, the other national securities exchanges, the several TRFs of 
FINRA, and Electronic Communication Networks (``ECN'') that produce 
proprietary data all produce trades and trade reports. Each is 
currently permitted to produce last sale information products, and many 
currently do, including Nasdaq and NYSE. In addition, market 
participants can gain access to BZX last sale prices and top-of-book 
quotations though integrated with the prices of other markets on feeds 
made available through the SIPs.
    In sum, the availability of a variety of alternative sources of 
information imposes significant competitive pressures on Exchange data 
products and the Exchange's compelling need to attract order flow 
imposes significant competitive pressure on the Exchange to act 
equitably, fairly, and reasonably in setting the proposed data product 
fees. The proposed data product fees are, in part, responses to that 
pressure. The Exchange believes that the proposed fees would reflect an 
equitable allocation of its overall costs to users of its facilities.
    In addition, when establishing the proposed fees, the Exchange 
considered the competitiveness of the market for proprietary data and 
all of the implications of that competition. The Exchange believes that 
it has considered all relevant factors and has not considered 
irrelevant factors in order to establish fair, reasonable, and not 
unreasonably discriminatory fees and an equitable allocation of fees 
among all Users. The existence of alternatives to BZX Last Sale and BZX 
Top, including existing similar feeds by other exchanges, consolidated 
data, and proprietary data from other sources, ensures that the 
Exchange cannot set unreasonable fees, or fees that are unreasonably 
discriminatory, when vendors and subscribers can elect these 
alternatives or choose not to purchase a specific proprietary data 
product if its cost to purchase is not justified by the returns any 
particular vendor or subscriber would achieve through the purchase.
BATS One Feed
    The BATS One Feed will enhance competition because it not only 
provides content that is competitive with the similar products offered 
by other exchanges, but will provide pricing that is competitive as 
well. The BATS One Feed provides investors with an alternative option 
for receiving market data and competes directly with similar market 
data products currently offered by the NYSE and Nasdaq.\52\ As 
previously stated, the fees for the BATS One Feed are significantly 
lower than alternative exchange products. The BATS One Feed is less 
expensive per professional user and more than 85% less expensive for an 
enterprise license for professional users (50% less for non-
professional users) when compared to a similar competitor exchange 
product, offering firms a lower cost alternative for similar content.
---------------------------------------------------------------------------

    \52\ See Nasdaq Basic, http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed 
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market 
center, as well as trades reported to the FINRA/Nasdaq Trade 
Reporting Facility (``TRF'')); Nasdaq NLS Plus, http://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8, 
2014) (data feed providing last sale data as well as consolidated 
volume from the following Nasdaq OMX markets for U.S. exchange-
listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and 
Nasdaq OMX PSX); Securities Exchange Act Release No. 73553 (November 
6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) (Notice 
of Amendment No. 1 and Order Granting Accelerated Approval to a 
Proposed Rule Change, as Modified by Amendment No.1, To Establish 
the NYSE Best Quote & Trades (``BQT'') Data Feed); http://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades (last 
visited May 27, 2014) (data feed providing unified view of BBO and 
last sale information for the NYSE, NYSE Arca, and NYSE MKT).
---------------------------------------------------------------------------

    Although the BATS Exchanges are the exclusive distributors of the 
individual data feeds from which certain data elements would be taken 
to create the BATS One Feed, the Exchange would not be the exclusive 
distributor of the aggregated and consolidated information that would 
compose the proposed BATS One Feed. Any entity that receives, or elects 
to received, the underlying data feeds would be able to, if it so 
chooses, to create a data feed with the same information included in 
the BATS One Feed and sell and distribute it to its clients so that it 
could be received by those clients as quickly as the BATS One Feed 
would be received by those same clients at a similar cost.\53\
---------------------------------------------------------------------------

    \53\ See BATS One Approval Order, supra note 10.
---------------------------------------------------------------------------

    The proposed pricing the Exchange would charge clients for the BATS 
One Feed compared to the cost of the individual data feeds from the 
BATS Exchanges would enable a vendor to receive the underlying data 
feeds and offer a similar product on a competitive basis and with no 
greater cost than the Exchange. The pricing the Exchange would charge 
for the BATS One Feed would not be lower than the cost to a vendor of 
receiving the underlying data feeds. The pricing the Exchange would 
charge clients for the BATS One Feed compared to the cost of the 
individual data feeds from the BATS Exchanges would enable a vendor to 
receive the underlying data feeds and offer a similar product on a 
competitive basis and with no greater cost than the Exchange. The 
Distributor Fees that the Exchange intends to propose for the BATS One 
Feed would not be less than the combined fee of subscribing to each 
individual data feed.\54\ In addition, the

[[Page 9836]]

Exchange believes that not charging External Distributors a 
Distribution Fee during their first three (3) months would not impede a 
vendor from creating a competing product. Specifically, a vendor 
seeking to create the BATS One Summary Feed could do so by subscribing 
to EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last Sale, BZX Top, BZX 
Last Sale, BYX Top and BYX Last Sale, all of which are either free or 
also include a New External Distributor Credit identical to that 
proposed for the BATS One Summary Feed. As a result, a competing vendor 
would incur similar costs as the Exchange in offering such free period 
and offer a competing product on a similar basis as the Exchange.
---------------------------------------------------------------------------

    \54\ The combined external distribution fee for the individual 
depth of book data feeds of the BATS Exchanges is $12,500.00 per 
month. The monthly External Distributor fee is $2,500 per month for 
the EDGX Depth, $2,500 per month for the EDGA Depth, $2,500 for BYX 
Depth, and $5,000 for BZX Depth. The combined external distribution 
fee for the individual top and last sale data feed of the BATS 
Exchanges is $5,000.00 per month. The monthly External Distributor 
fee is $1,250 per month for EDGX Top and EDGX Last Sale, free for 
EDGA Top and EDGA Last Sale, $1,250 for BYX Top and BYX Last Sale, 
and $2,500 for BZX Top and BZX Last Sale. See SR-EDGA-2015-09, SR-
EDGX-2015-09, and SR-BYX-2015-09. See also the BZX Fee Schedule 
available at http://www.batstrading.com/support/fee_schedule/bzx/.
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    The Exchange further believes that its proposed monthly Data 
Consolidation Fee would be pro-competitive because it is identical to a 
similar fee charged by the NYSE for its BQT feed and a vendor could 
create a competing product, perform a similar aggregating and 
consolidating function, and similarly charge for such service. The 
Exchange notes that a competing vendor might engage in a different 
analysis of assessing the cost of a competing product. The Exchanges 
believes that the incremental cost to a particular vendor for 
aggregation can be supported by the vendor's revenue opportunity and 
may be inconsequential if such vendor already has systems in place to 
perform these functions as part of creating its proprietary market data 
products and is able to allocate these costs over numerous products and 
customer relationships. For these reasons, the Exchange believes the 
proposed pricing, including the New External Distributor Fee Credit, 
would enable a vendor to create a competing product based on the 
individual data feeds and charge its clients a fee that it believes 
reflects the value of the aggregation and consolidation function that 
is competitive with BATS One Feed pricing.
    Finally, the Exchange notes that there is already actual 
competition for products similar to the BATS One Feed. The NYSE offers 
BQT which provides BBO and last sale information for the NYSE, NYSE 
Arca Equities, Inc. and NYSE MKT LLC.\55\ Nasdaq already offers Nasdaq 
Basic, a filed market data product, and through its affiliate, offers 
NLS Plus which provides a unified view of last sale information similar 
to the BATS One Feed.\56\ The existence of these competing data 
products demonstrates that there is ample, existing competition for 
products such as the BATS One Feed and the fees associated by such 
products is constrained by competition.
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    \55\ See supra note 52.
    \56\ Id.
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    In establishing the proposed fees, the Exchange considered the 
competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not considered irrelevant 
factors in order to establish fair, reasonable, and not unreasonably 
discriminatory fees and an equitable allocation of fees among all 
users. The existence of alternatives to the BATS One Feed, including 
the existing underlying feeds, consolidated data, and proprietary data 
from other sources, ensures that the Exchange cannot set unreasonable 
fees, or fees that are unreasonably discriminatory, when vendors and 
subscribers can elect these alternatives or choose not to purchase a 
specific proprietary data product if its cost to purchase is not 
justified by the returns any particular vendor or subscriber would 
achieve through the purchase.

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)(ii) of the Act \57\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\58\ 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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    \57\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \58\ 17 CFR 240.19b-4(f)(2).
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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-2015-11 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-BATS-2015-11. 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 inspection and copying at the principal office of BATS. 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-2015-11 and should be 
submitted on or before March 17, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\59\

[[Page 9837]]


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    \59\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03656 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P


