[Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012)]
[Notices]
[Pages 8310-8312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3332]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66358; File No. SR-BATS-2012-006]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of BATS Exchange, Inc.
February 8, 2012.
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 1, 2012, 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 proposes [sic] amend the fee schedule applicable to
Members \5\ and non-members of the Exchange pursuant to BATS Rules
15.1(a) and (c). Changes will become operative on February 1, 2012.
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\5\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
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The text of the proposed rule change is available at the Exchange's
Web site at http://www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to modify the ``Options Pricing'' section of
its fee schedule to change pricing with respect to orders routed to
NASDAQ OMX PHLX LLC (``PHLX''). PHLX has recently introduced increases
to its rates to remove liquidity in specified symbols \6\ identified by
the Exchange as
[[Page 8311]]
Make/Take issues (identified as ``Select Symbols'' at PHLX).\7\
Further, PHLX has recently announced an increase to its current fee of
$0.31 per contract to $0.39 per contract for customer orders that
remove liquidity in Make/Take issues.\8\ The Exchange currently charges
certain flat rates for routing to other options exchanges that have
been placed into three groups based on the approximate cost of routing
to such venues. The grouping of away options exchanges is based on the
cost of transaction fees assessed by each venue as well as costs to the
Exchange for routing (i.e., clearing fees, infrastructure costs, etc.).
The Exchange currently assesses fees of $0.30 per contract for Customer
\9\ orders and $0.55 per contract for Professional,\10\ Firm or Market
Maker \11\ orders routed to PHLX in Make/Take issues.\12\ At the
current rates, the Exchange is not currently covering its costs on
Customer orders routed to PHLX in Make/Take issues, based on the
existing base rate of $0.31 per contract plus additional costs incurred
by the Exchange. With the proposal by PHLX to increase fees for
Customer orders that remove liquidity to $0.39 per share, the Exchange
will be even further from the cost of routing customer orders to PHLX
if the Exchange continues to charge $0.30 per contract. In order to
better approximate the cost to the Exchange of routing Customer orders
to PHLX, the Exchange proposes to place PHLX in the away options
exchange grouping along with the Nasdaq Options Market (``NOM''), C2
Options Exchange, Incorporated (``C2''), and NYSE Arca Options
(``Arca'') in Make/Take issues. Accordingly, the Exchange proposes to
charge a fee of $0.50 per contract for Customer orders and to continue
to charge $0.55 per contract for Professional, Firm, or Market Maker
orders routed to and executed at PHLX.
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\6\ See Securities Exchange Act Release No. 66100 (January 4,
2012), 77 FR 1532 (January 10, 2012) (SR-Phlx-2011-185) (notice of
filing and immediate effectiveness of proposal to modify fees,
including an increase to the Customer Fee for Removing Liquidity
from $0.29 per contract to $0.31 per contract); Securities Exchange
Act Release No. 65940 (December 12, 2011), 76 FR 78322 (December 16,
2011) (SR-Phlx-2011-162) (notice of filing and immediate
effectiveness of proposal to modify fees, including an increase to
the Customer Fee for Removing Liquidity from $0.25 per contract to
$0.29 per contract).
\7\ As defined on the fee schedule, Make/Take pricing refers to
executions at the identified exchange under which ``Post Liquidity''
or ``Maker'' rebates (``Make'') are credited by that exchange and
``Take Liquidity'' or ``Taker'' fees (``Take'') are charged by that
exchange.
\8\ See Options Trader Alert 2012-4, ``PHLX and NOM
Announce Updated Pricing for Customer Orders,'' January 25, 2012.
\9\ As defined on the Exchange's fee schedule, a Customer order
refers to an order identified by a Member for clearing in the
Customer range at the Options Clearing Corporation (``OCC''),
excluding any transaction for a ``Professional'' as defined in
Exchange Rule 16.1.
\10\ The term ``Professional'' is defined in Exchange Rule 16.1
to mean any person or entity that (A) is not a broker or dealer in
securities, and (B) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s).
\11\ As defined on the Exchange's fee schedule, the terms
``Firm'' and ``Market Maker'' apply to any transaction identified by
a member for clearing in the Firm or Market Maker range,
respectively, at the OCC.
\12\ As defined on the fee schedule, Make/Take pricing refers to
executions at the identified exchange under which ``Post Liquidity''
or ``Maker'' rebates (``Make'') are credited by that exchange and
``Take Liquidity'' or ``Taker'' fees (``Take'') are charged by that
exchange.
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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.\13\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\14\ in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and other persons using any facility or system which the
Exchange operates or controls. The Exchange notes that it operates in a
highly competitive market in which market participants can readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive. The Exchange also notes that with
respect to the change proposed in this filing, although routing options
are available to all Users, Users are not required to use the
Exchange's routing services, but instead, the Exchange's routing
services are completely optional. Members can manage their own routing
to different options exchanges or can utilize a myriad of other routing
solutions that are available to market participants.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to modify routing fees to
PHLX is reasonable because the modified fee is a better approximation
of the cost to the Exchange for routing Customer orders to PHLX. The
Exchange believes that its flat fee structure for orders routed to
various venues is a fair and equitable approach to pricing, as it
provides certainty with respect to execution fees at groups of away
options exchanges. Under its flat fee structure, the Exchange has
previously operated at a slight loss for Customer orders routed to and
executed at PHLX. The Exchange believes that the proposed change will
allow it to recoup and better cover its costs of providing routing
services going forward. The Exchange also believes that the proposed
fees for orders routed to and executed at PHLX are fair and equitable
and not unreasonably discriminatory in that they apply equally to all
Exchange Users.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and Rule 19b-
4(f)(2) thereunder,\16\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge applicable to the
Exchange's Members and non-members, which renders the proposed rule
change effective upon filing.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BATS-2012-006 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BATS-2012-006. 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
[[Page 8312]]
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 a.m. and 3 p.m. Copies of such
filing will also 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 No. SR-BATS-2012-006 and should be submitted on or before March 6,
2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3332 Filed 2-13-12; 8:45 am]
BILLING CODE 8011-01-P